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No. 30,340 


Friday September 18 1987 

World News 

Iraqis push 
back tank 
by Iran 

Business Summary 

Owens in 
plan to buy 
for $744m 

Iraq said it had repulsed an Ira- OWENS-EUJNOIS, largest US 
nira tank. rad artillery often- glass container manufacturer 
sive in an 18-bour battle, while which went private in February 

Tran (htwafstioH tn ch«li Tmui. liun»_i«uT i L 

Soviet Union and 
US to hold talks 
on nuclear testing 


Security Council was meeting to a deal worth about 5744m. Page 
discuss with Secretary General S3 . 

Javier Perez de Cuellar the re^ meat to begin full-scale negotia- wp wouia oe aignea, opinion polls uniformly show 

suits of his recent^S» nS- LONDON: Further positive eco- tions on nuclear testing before ^ be imade public at this June- that American voters fimrarj 
sion to the Gulf oil nomic signals spurred instito- December L tare. It is more likely to be an- arms control agreements with 

sion to the Gul£ Kuwait ell nomic signals spurred instita- 
boost, page 6 tional investors and the FT-SE 

- ■ . _ _ , 100 index pierced the %300 lev- 

Bangladesh flood fight r -- ■ 

Troops were struggling to re* ■ ■ lllOBX 
pair a leaking embankment on OnSnary Share 
the Fadma River which was 
threatening to flood the 250,000 - a U n 

population town of Rajshahi in 1 900 M ~M 

northern Bangladesh.; . - - ' Igp 

Greek church talks ■ 1700 iii 

Prime Minister Andreas Papan- 1 /ou I £3 
dreon and Archbishop Sera* H? m 

phim, head of the Greek Ortho- 1 600 jm ■QMrjrz ^ i _ 
doz Church, agreed to set up a ^ j ?- M 

joint co mmit t e e in an effort to ISOO & i 

end the crisis in church-state 

Sweden takesdefector , M ^s5Sia« 

Sweden ignored Soviet extradi- 19B7 o ftn 

turn pleas by granting political ^°P 

asylum to defector Roman Svis- eT for the first time since August! 
tonov, who Hew a stolen biplane 5ult closed np 217 at 230A5 and] 

nomic signals spurred instito* December 1. tar& IE 1®.®"® to be an 

tional investors and the FT-SE •«.» „„„ . Dounced daring the meeting of Moscow 

lOttlndgt p‘erced the 2^00 ler-l 't2&£S93ESSi& ^ 

I ■ — ■ I °* Sta t e and Mr Eduard tHa minister tuM>nn rt»«» in« 

le United Nations General As- But even as the White House 
mibly in New York next week, was preparing to welcome an 
The ministers began the last accord the President suffered a 

across the Baltic. 

the FT Ordinary was 2L8 higher 
at 1,812.0. Gilts also responded 
strongly. Details, Page 42 

1 . .. ... . . . 1 US wu uaicis ucfiou uic uw anwu uiciinuucuieuuracu a 

MOTaranadze, tlw^n^ For- day of their meeting in a re- setback to his arms control 

taxed frame of mind. Mr Shev- strategy on Capitol HilL 
w -SSfSB «dnadze said: -we are begin- The US Senate gave prelimi- 

S f ^ nin ¥ toda y *n a %°° d mood,* nary approval to a provision in 

while Mr Shnltz said that he and the defence appropriations bill 
^ his Soviet colleague had had la which would withold funds for 

!??“? Their three dv Iot 0 f good discussions' of the the testing and development of 

meemi&, which was originally proposed INF agreement and space based weapons which vio- 
tJlSSSS? othep lasaes <>n agenda- hited hte original interpreta- 
These included a proposed tion of the 1972 Anti-Ballistic 
^ agreement on reductions of Ion- Missile Treaty. 

U f f grange strategic nuclear arms. The Administration , in the 

the limitation of nuclear tests, a face of strenuous opposition 
proposed ban on chemical from Senator Sam Nunn , the 
weapons, human rights prob* powerful Democrat who chairs , 
S™? • ” a d m an »_ ™ c P? «ate lems and regional issues such the committeejias been insist - 1 

88 Afghanistan and the sitna- ing that a broader interpeation ' 
^ tion in the Gul£ of the ABM Treaty , one which 

e x tension -of the meeting. Among the problems for woold give it greater freedom to 

Mr Gennady Gerasimov, the -which the ministers are be- test elements of a strategic de- 
Soviet Foreign Ministry spokes- lieved to have fbund a compro- fence system ,is permissible . 
man, was even more optimistic, mise formula was the Soviet de- „ - . . _ . ^ , 

remarking: "History Is in the mand that US controlled Tne soviet union peeking to 

Gotthard tunnel opens strongly. Details, Page < 

Switzerland's main north-south WAIL STREET: the Dow Jones| 
motorway ' route through the industrial average closed down| 
Gotthard Tunnel was reopening 229 at 2£27.9a Page 48 

for cars, but not trucks, after , 

closure caused by flo od dam- TOKYO: Heavy, trade 
age. • . makers pushed the 

remarking "History is in the mand that US controlled i mon !? e 5£ ng 10 

making". warheads on 72 West German deveJopment ofttesoc 

All the signs were, that the Pershing 1A missiles shoud be 
ministers had made even better eliminated at the same time as _ Imfa ative (SPD has 

progress than had been expec- the missiles themselves. n^otia- 

Mr Helmut Kohl, the West *£££/&£** ?v Umber of 

TOKYO: Heavy trade' in steel- 
makers pushed the sector 
higher but small-lot selling 

progress than had been expec- the missiles themselves, 
ted and that they would be able Mr Helmut Kohl, the West 
to announce at the end of the German Chancellor, has al- 
day that they had reached a ready given an undertaking that 
broad agreement on the aboli- his government would destroy 
tion of all medium-range mis- its own iwiagiiew once the super 

strategic missile in the super- . 

ready given an undertaking that US accep ’ 

his government would destroy of curbs on SDL 

sites worldwide. Such an accord 

OkJ-u, ^ eisewnera leu me 

urorac peace appeal . ^ me lower at 2 4 

French Prime Minister Jacques Page 48 
Chirac flew to New Caledonia n . T . , 

where he offered reconciliation SfgSjJ®' tr-a 

to separatists who tost the re- “£*“ 

cent referendum on the Pacific to 64fl»25 from $4aa5a| 
island's status. Page 38 I 

elsewhere left the Nikkei aver- 1 would be the first anus control 
age 112.42 lower at 24^5SL31.I agreement between the US and 

Polish workers protest 

Some 300 factory workers in 
Wroclaw, south-west Poland, 

DOLLAR closed in New York at . 
DML8165, Y143.40, FFr&0555, ’ 
SFrLBOOO: It fell in T^tidnn to 
DM12150 (DML8155) and > 

Y143-35 (Y14A35), but was on- | 

the Soviet Union since the con- 
clusion of the SALT 2 agree- 
ment on the limitation of strate- 
gic nuclear weapons in 1979. 

It is still uncertain, however, 
whether a date for a summit 
meeting between President Be- 
agan and Mr M*** 18 * 1 Gorbach- 

its own miatiiwi once the super A hint the continuing tensions 
power INF deal had been im- within the Administration of 
piemen ted, but the US had pre- arms negotiations And of rnm- 
viously promised only that they bling Pentagon discontent with 
would be withdrawn from Ger- the way the arms talks have 
many at the same time, but not evolved surfaced yesterday with 
necessarily destroyed. It had al* reports that Pentagon officials 
so argued that the INF negotia- have been shut out of some of 
tions were about miamla* and the negotiations and given back 
not warheads. The White House seats at other meetings between 
as seen an intermediate range the US and Soviet delegations 
arms accord with Moscow as during the three days of talks. 

had signed a petition in rapport; i 

of two ooDeagnes sacked- tor ^ r ?2j j 

opposition sources said.. 

Bank of England figures, tfe 
dollar’s exchange rate Index 
. . ... fell to 1009 from lOLft Page S7 

«™“®*6«tosed in New YoA 
South Amcas whites «wld at $L647a It rose in London to 
their cwtoave snbuxhs gua® <$l 6455) and FFrft9700 
but le^substaotive relaxations (FFr9.9600). However, it fell to 
of apartheid were proposed m.a Y23&00 (Y237.50) and was un- 

Honda announces 50 % 
rise in US production 


reportby th e Pr^den^Coun- changed at DM2^875 and HONDA, the third largest Japa- to secure sales outside North said construction of the second 

cIL Pretoria s. main advisory SFr2.4775. Ihe pound’s ex- pese car mazmfectur^mada^ America comparable to the tai^ assembly plant will cost 9380m 

poa y ~ _• . _ change rate index ruse 0.1 to ready the biggest foreign car gets recently set by Chrysler and will be completed by An- 

" ‘ • - ■ * 732. Page 37 maker in the US, yesterday an- and Ford of some 10,000. gust, 1988. 

Olympic mission hCA-Lo. An^le^bmed enter- »■ « ^ 

Head of the Olympic movement tainment group, has examined toTO mS £^mSESk 

Jmn A?h»io Sammmeh aid the 

est *~ American-built cars to Japan by level of 60 per cent, and to in- The additional investment wiH 

cre«e its production eaguner- brin_g_toUI output, to 

txwy. change rate index ruse dl to 

: — ^ “ 732. Page 37 

Olympic mission MCA, Los Angeles-based enter 

Head of the Olympic movement tainment group, has examined 
Juan Antonio Samaranch said the possibility of building a 

ready the biggest foreign car 
maker in the US, yesterday an- 
nounced a 50 per cent expan- 

id will be completed by An- 

In addition, Honda will also 

Mikhail Gorbachev in art effort mated cost of over 3500m, says 
to forestall the threat of a Com- Mr Charles Paul, vice president 
m uniat boycott, of the 1988 Page 27 
Games in Seoul. 



achieved, Honda will not only ®P 
be building some 500,000 cars a vt 

crease its production engineer- bring total engine output to 
ara ing, research and development 500^)00 units by about the end of 

in the 

to create- the decade. 

Indian protest deaths S55d ^SS&iSd 

Indiati police killed at least 10 ; takeover bid from Australia’s 
people when they fired on form- Mr Alan Bond, brewing and re- 
ers demonstrating for drought sources magnate. Page 27 

relief in the southern state of 

Tamil Nadu. ■ - POWER CORPORATION of Cl 

a* fa, flnanpig) services and in- 
. . dustrial group, is joining Imas- 
laaoavn scepucism CO and other large companies in 

A declaration by Ubyan leader Sutter Hill Ventures, ventor-: 
Muammer Gadaffi that his war capita! partnership investing in 
with Chad was over was anliie- high technology turns mainly in 
ly to end the conflict, diplomats the US. Page 27 

Said. Page 6 CILVKN(Vlt«l RoMmn^lnaHtl 

fonrtfa-largest US brewer, has! year in its Ohio plants by the ltont US car company". 


Honda officials said the com- 
pany's objective was not just to 

end of the decade, but it could The exporting strategy is part supply the US market, where it 
soon outstrip the American- a plan to increase Honda’s mg doing better in expanding 

owned motor manofectnrers as prod uction capacity in the US its market share t han any of Its 
an exporter of US goods. bya further 150,000 cars a year Japanese rivals, but to produce 

The strategy, announced by wi™ «*« construction of a new world-class competitiveness. 

Mr Tadashi Knme, Honda's assembly plant adjacent to the 

president, calls for the export of company’s present fecilitles At present exchange rates 
70,000 cars annually from the near Marysville, Ohio and productivity levels, the unit 

US byl99L Although this figure These are expected to pro- costs for Honda’s US-made cars 
In cud es Pfiflda, »" well aa Ja. duce 320,000 cars this year, ris- are said to be comparable to 
pan and Europe, currentHonda ing to SOOjOOO in 1888, when the Japanese-made models, but on- 
sales in Canada -around 50,000- first MaiysvQIe plant will have ly after allowing for delivery 
***** the company hnpaa reached foil capacity. Honda costs of $500 a car. 

Pope backs migrants 

The Pope championed migra 
fern workers in a speech 
Monterey, Califbmia. 

Managua opti mis m 

GB-INNO-BM, Belgium’s largest 
retailing group, saw six-month 
sales edge ahead to BFr63.8bn 
($1.69bn). Page 28 

EAST ASIATIC* international 
trading group, made a first-half 
pre-tax profit of DKrffftn <$9.6m) 
compared with last yearis 

Central America’s five foreign ^^rTton W nd.m gram to: 
ministero were optimistic when gewhole of 1986 of DKr885m. 
they began a meeting in Mana- rase ** ■ 
gua with officials from eight DASSAULT-BREGUET, French 

Puttnam to leave top job 
with Columbia Pictures 


gion. P- gc 5 • for the first-half of 1S87 on turn- 

" " overof FFr6^7bn. Page 28 

Arroyo goes CREDIT Commercial de France, 

Phili ppines President Corazon recently- privatised French 
Aquino accepted the resigns- banking group, made a net prof- 
tion of controversial executive jt of FFr21A5m (5352m) in fixst- 

per, cent to FFrtagm ff7m )g „„ Columbia Pictures film- chief executive of the combined including Warren Beatty and 
for the first-half of 1987 on turn-1 ; n hniHiiurmunmmv Dustin HofFmat, . 

secretary Joker Arroyo. Page 6 

half of 1987 and expects a 'satis- 
factory increase” in earnings fin- 
the year. Page 28 

DlaKa-dltig foiled the year. Page 28 

Dutch police said they had ar- AKZO, Dutch chemicals and fl- 

rested a young couple who had 
advertised a soft drugs home 
delivery service modelled on 
American door-to-door pizza 

making subsidiary to Holly- holding company. Dnstin Hoffinan - co-stars of 

wood. Is leaving the job and re- It now seems likely, however, Columbia’s disastrously unsue- 
t nrning to independent film that the two operations may cessfol comedy Ishtar - and Bill 
production. eventually be integrated, creat- Cosby, America’s most popular 

Mr Puttnam’s departure con- ing the third biggest film studio television comedian, who has 
firms that the imminent merger in Hollywood, after Warner and switched an important produc- 
between Coca-Cola's entertain- Paramount tern contract from Columbia to 

meats businesses and Tri-Star Yesterday’s announcement .Warner Brothers. 

Pictures will create a film stu- brings to an end a brief but Mr Puttnam has a contract au- 
dio firmly controlled by Mr Vic- stormy period at Columbia, dor which he is obliged to re- 
tor Kaufinan, the present Tri- where Mr Puttnam tried to wage turn to Warner Brothers as an 
Star chairman. a one-man campaign a g a ins t independent producer as soon 

i When the merger was origi- what he saw as the waste and as he relinquises management 

bres group, confirmed it is sell- -Star chairman. a one-man campaign against independent producer as soon 

ing its consumer products divi- j When the merger was origi- what he saw as the waste rad as he relinquises m anag ement 
sion to Sara Dee, major US inaUy announced two weeks ago, e x t ra v a ngance of Hollywood’s responsibilities at Colombia 

J- r. '■! -a.x i a1..a sltA fCl>M mm ftexAMAMAl rwuIimiHavi voItiao Pnllltani A* It ullm* —nm 

pizza consumer goods company, fori jit was stated that the film pro- traditional production values Putt n am Halt stirs Cote's scop- 

FI L25bn ($612m). Page 28 

duction businesses of Columbia and star system. 

27 lad-CXnitjdMaifate 

World Guide - 

Ca maB fltkg 

C i t ws w w d ■■ — - 

Carreaeic *— 
Editorial cwmeat. 




..Wurid Index. 

Prime Minister ZeidalHi&i Insists 

tiie country is In^ "rciy sound shape") 

ia and star system, ties. Page 27 

Setra Africa: President’s Council re- 

views apartheid 6 

JORDAN IS wraiiagwfwmfe Saatchis* search for seri- 
. ous money — - — 8 

Technology: Electron-beam welding* a 
UNACCUSTOMED ” arrtaee ^ the «- 

ECONOMIC Editorial comment: Presidency in Mex- 

— « ico; US threat to open trade JL 24 

AUSn^TTY Lombard: whytbebezzle is rising ^25 

Lex: Guinness; markets; Redtitt and 
Colman; RT2 _26 

Hollywood: Puttnam’s final reel 27 

Survey: Office property 35-18 

THE UNITED STATES and So- ^ 8°™* leader, at which one way of boosting the Presi- 
viet Union said late last nisht an agreement on the abolition dent’s prestige in the wake of 
that they had reached an agree- of intermediate range nuclear the Iran /contra afEair Public i 
meat to begin full-scale negotia- toces (INF) would be signed, opinion polls uniformly show 

a. . .« « “ _ sill ha nuria nnhlte «i IM* that Amnnmin vaIam fonnnrl 

ZZbeadTon bWS= euibthedevelopment ofthe soc 
Pershing 1A missiles shoud be •£££ 


European Community’s 

plan for a 
single market, Page 24 

D 8523 A 

Hill Samuel 
rejects offer 
from Saatchi 


Luis Carlos Bresser Periera; 
serious negotiations 

Brazil to 
present new 
debt plan 
to banks 

By Anne Charters In BnsBto 

BRAZIL plans to present a 
new formal debt proposal to Its 
leading creditor banks at a 
meeting on September 25, just 
before the International finan- 
cial community gathers to 
Washington for the annual 
meetings of the International 
Monetary Fund and the World 

Mr Lois Carlos Bresser Per- 
eira, the Finance Minister, 
said the country would not lift 
its seven-month-old suspen- 
sion of Interest payments on 
268bn of debt to banks. This 
was because it wanted to con- 
vince banks that they needed 
to be more Innovative and seri- 
ous in considering alternative 

"Brazil wants a long-term so- 
lution to the debt problem that 
assures growt h and price sta- 
bility for the country, a reinte- 
gration into the international 
financial community and a 
reasonable solution for the 
banks," Mr Bresser Pereira 

•Hie fort that we are going to 
negotiate seriously should be 
enough to p r even t the banks 
from having toredaadb their 
loans,” the minister said in a 
re fe re n ce to the October dead- 
line when US regulators may 
downgrade Brazilian loans, 
.forcing new loan loss previ- 

Mr Fer nand o MHHet, presi- 
dent of the central bank, and 
Mr Fernaa Bracber, special ad- 
viser for debt and a former cen- 
tral bank president, will nego- 
tiate with the banks for better 
conditions than those con- 
tained in debt agreements with 
Mexico, Argentina and the 

Mr Bresser Pereira ruled out 
a shore-term rente in which 
.Brazil would raise an Interim 
bank lean In order to repgy in- 
terest arrears. 

Interview, Page 5. World Bank 
report. Pages 

HILL SAMUEL, the troubled 
UK merchant bank, said yester- 
day that it had rereived a take- 
over approach from Saatchi & 
Saatchi, the advertising and 
business services group, but 
had turned it down. 

The talks, which were initi- 
ated last Friday, ended shortly 
before lunchtime yesterday. 

A spokesman for Hill Samuel 
said that the terms being of- 
fered fay Saatchi were not ac- 
ceptable and that the takeover 
proposal lacked commercial ad- 
vantage He declined to say 
what the terms were. 

This is the first pnblicly con- 
firmed bid approach received 
by Hill Samuel, which has been 
beleaguered since the collapse 
of its merger talks with Union 
Bank of Switzerland last month. 
It is also the second known ap- 
proach by Saatchi to a UK bank 
in the last few days. At tbe 
weekend it confirmed that it 
had contemplated an offer for 

the Midland B ank. 

Saatchi was represented at 
yesterday’s meeting by Mr 
Maurice Saatchi, one of the 
company's co-founder brothers. 
He met Sir Robert Clark, the 
chairman, and Mr David Davies, 

iHill Samuel’s new chief execu- 

It is understood that he of- 
fered to buy the entire group, 
and mentioned a possible pur- 
chase price. He also guaranteed 
to protect the independence of 
Hill Samuel within the Saatchi 
group if the bid was successful. 

The Hill Samuel spokesman 
said last night that no other 
merger discussions were under 
way. However, speculation con- 
tinued to surround Hill Samu- 
el's shares in the stock market, 
where they ended the day with a 
gain of 7p at 664p. 

Mr Davies has completed a 
strategic plan for Hill Samuel 
which he presented to the 
board earlier this week. The 
spokesman said that the board 
had approved the plan, and Mr 
Davies was now working on it. 

Clay Harris adds: By last 
night, Saatchi had not made any 
statement about Hill SamneL 
Earlier this week, Saatchi said 
that it was in discussions about 
possible takeovers - or other 
forms of partnership - with a 
number of British financial ser- 
vices companies, which it de- 
clined to name. 

Management: Page 8 

Marshall Field to 
get $110m facelift 


century downtown Chicago de- 
partment store which made its 
name by "giving the lady what 
she wants,” is to receive a $110in 
facelift in the biggest single 
renovation project in US retail- 
ing history. 

■ Owned by BAT Industries, the 
■British tobacco-based multina- 
tional, the 73-acre store on State 
Street, Chicago, is the world’s 
second largest after Macy*s in 
New York City. 

BAT said the project repre- 
sented "a landmark" in the re- 
tail and financial renaissance 
of the city's central business 
district Chicago's city fathers 
are also expected to approve 
soon the construction nearby of 
Block 37, a development includ- 
ing two new towers with L5m 
-square feet of office space. 

'• The five-year Marshall Field 
renovation plan includes the 
creation of an 11-storey atrium 
:as the store’s centrepiece. Con- 
struction is expected to start in 
I January and continue until 
, 1992, with the store remaining 
I open during the work. 

The project has been de- 
; signed by Hambrecht Terrell 


La Defense 

International, a US retail de- 
sign consultant whose other cli- 
ents include Bloomingdale’s, 
Mary’s rad Calvin Klein. 

It will be the biggest so far of 

Continued on Page 26 

350,000 sq ft office development scheme 
acquired by Clients of Healey & Baker 



Parly 2 

250,000 sq ft development extension 
to the regional shopping centre 
acquired by Clients of Healey & Baker 



2 major city centre office investments 
sold by Healey & Baker 


Healey & Baker 




Bonn foresees higher bndget deficit 


THE West German Govern- 
ment facing lower tax revenues 
as a result of a sluggish 
economy, has admitted that the 
federal budget deficit Hus year 
is likely to be DU 29bn 
(£9.75bn), DM 3bn more than 
announced only last week. 

At the same time. Mr Bans 
Tietmayer, state secretary at 
the Finance Ministry, has con- 
ceded that the Government has 
a "credibility problem" in try- 
ing to restrain budget expendi- 
ture and deficits in coming 

The DU 29bn deficit foreseen 
this year compares with the 
DU 22.3bn projected in the 
spring and the figure of 
DU 26bn given by Mr Gerhard 

Stoltenberg, the Finance Mini- 
ster, in the Bundestag last 

The Bundesbank, the central 
bank, in its latest annual report 
published today, also focuses on 
growing public sector deficits. 

The borrowing requirement 
of central, state and local 
governments, planned origin- 
ally to fall slightly this year 
from last year's DU 43bn, in 
fact looks likely to grow by 
around DU lObn, the Bundes- 
bank says. 

It blames faltering receipts, 
above all from taxes, as well as 
relatively high spending 
growth. Although die central 
government will probably keep 
its rise in spending to the 

2,5 per cent foreseen in budget- 
ary plans, the Laender (states) 
are likely to increase expendi- 
ture beyond the 3 per cent 
originally planned. 

The centre-right Government 
has already run into criti cism 
from its own business and con- 
servative supporters over plans 
for a further increase in 
deficits in coming years as a 
result of tax cuts planned in 
1988 and 190. 

According to projections 
published during the summer, 
the federal deficit was expected 
to grow to DU 31bn by 1990, 
with, the overall government 
shortfall foreseen rising to 
DH 65bn in that year. Both 
these figures now seem 

considerable underestimates, j 
assuming -that the Government's , 
1390 tax-cutting plans— which 1 
still hare to go through a 
lengthy political consultation 1 
process— actually go ahead. i 

The Berlin-based German 
Economic Institute, meanwhile | 
has delivered a stiff warning 
against any government plans I 
to cut expenditure to try to 
limit increases in budget I 
deficits in coming years. ; 

Labelling such a policy 
"short-tighted,” the institute 
says in its latest report that 
European budgetary policies 
need to turn expansionary to 
try to bead -off the danger of a 
world downturn caused by a 
possible recession in the US. 

West Germans spend more and save less 


WEST GERMANS are spending 
more on goods and holidays 
abroad and saving less, a trend 
whicb could lead to a steady re- 
duction of Germany’s high sur- 
pluses, according to the latest 
monthly report of the Bundes- 

With private consumption up 
strongly again this year — retail 
turnover was 45 per cent 
higher in July than the same 
month of 1986 — private savings 
fell by a tenth in the second 
quarter over the first quarter. 

Germans saved, on average, 
13 per cent of their disposable 
incomes against 14.5 per cent a 

Bofors faces 
fresh arms 

By Kevin Done rn Stockholm 

A SWEDISH peace organisa- 
tion yesterday published fresh 
claims of attempted arms 
smuggling to Iran by Bofors, 
the Swedish weapons manufac- 
turer and a subsidiary of Nobel 
Industries. The latest allega- 
tions concern the supply of 
field artillery systems (howit- 

The Swedish Peace and Arbi- 
tration Association (SFSF), 
which has already played a 
central role in earlier revela- 
tions about Bofors weapons 
smuggling to the Middle East 
including the supply of Bofors 
BBS 70 ground to air missiles, 
yesterday revealed new allega- 
tions supplied from sources 
within Bofors. 

According to these sources an 
order was placed with Bofors 
in September 2985 for the 
delivery of 18 howitzers to 
Singapore. One of the sources 
claims that the final destination 
was Iran. 

Singapore has been shown in 
previous deals to have been 
used by Bofors as a trans- 
shipment point for the reexport 
of weapons to the Middle East, 
in -order to circumvent Swedish 
arms exports regulations. 

It is claimed by SFSF that 
the order -was stopped by some- 
one in the Swedish Government 
-—possibly Mr Olof Palme, the 
then Swedish Prime Minister 
who was assassinated by a still 
unidentified gunman in Stock- 
holm on February 28 last year. 

According to the Bofors 
sources the Singapore order 
was freed later in 1986, but it is 
still unclear whether the 
artillery systems were in fact 

The Swedish authorities and 
Bofors haw hitherto denied 
any knowledge of such an order 
to Singapore. Yesterday it was 
confirmed, however, that Bofors 
had made a Vender offer for IS 
howitzers to Singapore in the 
summer of 1986. 

Austrian arms 
charge man 
to be held 

By Judy Dempsey 

THE FORMER director of 
Noricum, the weapons division 
of Voest-Alpine, Austria’s 
largest state-owned steel and 
engineering group which is 
under investigation for 

Illegally selling arms to Iran 
is to be kept in detention for 
the foreseeable future. 

Mr Peter Unterweger was 
detained a fortnight ago after 
polite raided Noricum's 

premises and confiscated docu- 
ments apparently related to the 
company’s illegal trading 
activities with Iran in 1985 and 

Developments took a bizarre 
turn this week when a Voest- 
Alpine spokesman said the 
company was continuing nego- 
tiations with Iran to build a 
factory which would Include a 
weapons division. Selling 

weapons to countries at war 
and building factories ex- 
clusively for military use is 
strictly forbidden under 

Austrian law. 

The Green Party has called 
for a full debate on the issue 
when parliament meets and has 
questioned the need for arma- 
ments factories iu neutral 
Austria. The conservative 

People’s Party says it wants 
parliament to be mare informed 
about export activities of the 
arms manufacturers. The 
Socialist Party has ruled out 
any inquiry until investigations 
by the justice authorities in 
Linz, the headquarters of Voest- 
Alpine have first been 

year ago, the report said. Both 
figures are seasonally adjusted. 
They also took out 20 per cent 
more long-term bank credits 
than a year ago, mainly to 
■finance new cars. But short- 
term borrowings and overdrafts 
were down. 

Car makers and retailers 
profited from the greater readi- 
ness of Germans to spend, with 
new registrations for private 
use up by 7 per cent in the 
April-July period over last year. 
The volume of spending prob- 
ably rose much more than unit 
sales, with higher prices for bet- 
ter equipped models. 

Also benefiting fro mthe rise 
Jn private consumption were 
textiles, rivaling and shoes, 
furniture and furnishings. 

Foreign holiday spending 
soared, the Bundesbank said. 
It was up by 12 per cent in 
April -July over the same 
period of 1986. Overall, dis- 
posable incomes were 3.5 per 
cent higher in the second 
quarter than in the year-ago 

Noting that exports were 
moving ahead again after 
earlier weakness caused by the 
strong D-mark, the central bank 
said it was desirable that a cut 

Hanoi seeks ties with Brussels 


came the first non-European 
member of Comecon, the Soviet- 
dominated trading bloc, to seek 
diplomatic relations with the 
European Community. 

Its request, in a letter from 
Vietnam Ambassador to France 
to Mr Jacques Delors, president 
of the European Commission, 
marks a potentially embarrass- 
ing diplomatic break from the 
Eastern European majority in 
the 10-natios grouping. The 
other non-European Comecon 
members are Cuba and Mon- 

The EC has been discussing 
whether to establish formal 
relations with Comecon for the 

past two years and has been 
pressing to reinforce links with 
Individual members rather than 
with the bloc as a whole. A 
previous round of talks broke 
down in 1981 because Comecon 
insisted on having group 
authority over bilateral trade, 
rather than letting its member 
states negotiate Independently. 

A Commission spokesman 
confirmed yesterday that Viet- 
nam would be given an answer 
and that its request “would be 
treated separately from the rest 
of the political -process with 

Brussels does not want to in- 
crease Comecon "s powers to in- 

Gibraltar storm breaks 
on European Parliament 


Bonn’s EC 
sparks row 

over the sovereignty of Gibral- 
tar brought stormy scenes, 
embarrassment and dismay to 
the European Parliament in 
Strasbourg yesterday. 

Sir Joshua Hassan, the Chief 
Minister of Gibraltar, was both 
the cause and the victim of the 
row which brought British and 
Spanish members of the Parlia- 
ment into conflict, and has left 
the European Democratic 
Group, a conservative alliance 
of British, Spanish and Danish 
MEPs, licking its wounds. 

Sir Joshua claimed yesterday 
that he had been humiliated by 
Lord Plumb, the president of 
the parliament; who changed 
the venue of their meeting 
from his own office at the last 
minute, apparently out of 
nervousness at the Spanish 

The whole affair centred on 
the question of whether a visit 
by Sir Joshua to the Parlia- 
ment, for the first time since 
Spain joined the EC, was 
actually an official or unofficial 

If it was official, then Spanish 
members of the Alianza Popu- 
lar, junior partners with the 
British Tories in the EDG. let 
it be known that they would 

By David Knsh 

i./fV * • *•'.«* ■ 


. '' i 

i Ik. 1 

Hamwi; g 

ays he was 

probably quit toe group in pro- 
test. There were also unseemly 
rows within the Socialist group, 
which contains major contin- 
gents from both Spain and toe 
British Labour Party. 

Sir Josoha was left seething 
for 35 minutes in the Presi- 
dent’s ante-chamber on Wednes- 
day night, before being escorted 
to the new location in the resi- 
dence of the British permanent 
representative to the Council of 
Europe. He refused to shake 
hands with Lord Plumb, refused 
to accept a drink, and stormed 
out of the meeting. 

THE BONN Governments 
nomination of Mr Peter 
Schmidhuber, from the right- 
I wing Bavarian Christian Social 
party, as one of West Germany’s 
EC Commissioners, has run into 
strong protest from the opposi- 
tion Social Democrats. 

At toe bidding of Mr Franz 
Josef Strauss, the CSU leader. 
Chancellor Helmut Kohl de- 
cided to put forward Mr 
Schmidhuber to replace the late 
Mr Alois Pfeiffer, one of Bonn’s 
two Commissioners in Brussels, 1 
who died during the summer. 

Mr Schmidhuber, 55, at pre- ! 
sent toe Bavarian state govern- , 
mentis official responsible for | 
federal relations, is planned to : 
take over Mr Pfeiffer’s respond- 1 
hilities for regional and labour 
policies and statistics. 

Mr Bans-Jochen Vogel, toe 
SPD chairman, said Mr Kohl’s 
decision broke with the estab- 
lished tradition that one of 
Bonn’s Commissioners come 
from toe opposition. 

Mr Karl-Heinz Narjes, toe 
senior West German Co mxnis- 
sioner responsible for industry, 
is a member of Mr Kohl’s 
Christian Democratic party, 
and has often been fiercely 
criticised by toe CSU, whale Mr 
Pfeiffer, a former trade union- 
ist, came from the SPD. 

Polish unions’ demands 


POLAND’S NEW trade unions National ! 
have urged the Government to ing in to 
drop attempts to decentralise living, 
prices and incomes policy in So far 
favour of centralised wage bar- wage has 
gai ni ng backed by price leaving 
controls designed to slow attempts 
inflation. cent ceilii 

The unions’ policy is set out 
in article this week by Mr Leon. Fnces : 
Podkaminer, their top economic excess o 
adviser, in the movement’s 11 

newspaper, Zwiszkoviec. memners. 

It comes as the Government 18 1116 1111 
continues to debate toe p rob- U P w^ges 
lem of how to deal with the The uz 
country’s chronic imbalance toe Gave; 
between supply and demand. to deceni 
The Finance Ministry is down to < 
pressing for big price increases as free p 
next year to soak up excess in line i 
demand while toe Central nornic rei 

National Bank is urging a slow- 
ing in toe rise in the cost of i 

So far this year the average I 
wage has grown by 21 per- cent 
leaving toe Government's I 
attempts to impose a 12 per ! 
cent ceiling on pay this year in I 

Prices are also increasing in 
excess of 20 per cent. The 
unions, which now elaiwi 7m 
members, are arguing that this 
is toe main factor in pushing 
up wages. 

The unions, in effect, want 
the Government to drop plans 
to decentralise wage decisions 
down to company level as well 
as free prices, all of which is 
in line with the official eco- 
nomic reform programme. 

in arts urged 

EUROPEAN culture ministers 
yesterday urged businesses to 
invest more money in the arts 
but warned that safeguards 
should be implemented to pro- 
tect creativity and freedom of 
expression, Our Lisbon. Corres- 
pondent writes. 

Culture ministers from toe 
21-nation Council of Europe, 
meeting in the historic Portu- 
guese town of Sintra for their 
fifth conferences, approved a 
series of resolutions to promote 
greater private sponsorship of 
toe arts. 

The ministers, apparently 
troubled by toe thought of 
operat singers wearing company 
logos on their costumes, parti- 

cularly emphaside the need to 
protect artistic integrity. 

cafl gains 

By Leslie Colttt in Budapest 

in surpluses came through 
increasing sales abroad being 
offset by a faster rise in im- 
ports as domestic demand 

So far, the current account 
surplus has hardly changed, 
despite the D-mark’s advance. 
In May-July, Germany’s current | 
account surplus was a season- 
ally adjusted DM 20bn (£6.7bn) | 
the same as the previous three ' 
months’ average and DM 1.5bn ' 
over toe same period of 1986. 
But the Bundesbank said toe 
trend to lower surpluses should 
be resumed, as imports rose in 
volume and price. 

fluence its members’ economies 
by treating it as a single block, 
but many Comecon members are 
said to fear that toe EC is 

aiming to get more favourable 
terms by dividing the organisa- 

terms by dividing the organisa- 
tion. The Community ran a 
$10 bn trade deficit with East 
European Communist countries 
last year, mainly because of im- 
ports of Soviet raw materials 
and energy. 

Hungary, Romania and 
Czechoslovakia have also 
started bilateral talks on trade 
and cooperation with toe EC. 
The remaining members are the 
Soviet Union, Bulgaria, East 
Germany and Poland. 

Financial nmes Friday September 18 1987 

Communist reformer 

may run for 
French presidency 

puts stress 
cm US role 
in Europe 


^r t 

By David Boehm 

An “Open Letter” to the 
Hungarian Parliament, call- 
ing for the Communist 

Government to be made ** re- 
sponsible ” to the legislature, 
yesterday gained Its most 
prominent and crucial 

Mr Remo Nyers, toe father 
of Hungary's economic re- 
form, salff he agreed with the 
need for parliamentary 
“ control ” of the one-party 
Government. Mr Nyers, a 
member of both the party's 
central committee and parlia- 
ment said a system of 
“political democracy” must 
be created in place of the 
present one. 

“In the distant future,” he 
■gain p u n g ar y should have a 
“ multi-party system as In the 
West.” But the immediate 
goal was to achieve the 
greatest degree of “plura - 
lism” in a one party system. 

Mr Nyers spoke In an inter- 
view yesterday at toe 
Hungarian Parliament which 
debated the Government's 
austerity programme to deal 
with a worsening economic 
situation. Oil Wednesday he 
was given a sustained ova- 
tion by fellow deputies when 
be urged a reform of 
economic planning In which 
« counter or alternative 

S iawa ” would be drawn up 
y non-government econo- 
mists. _ 

The “ open letter to Parlia- 
ment ” meanwhile, was 
surreptitiously circulated by 
deputies to those who had not 
yet received it is toe malL 
Signed by 100 mainly white 
collar workers including 
several officials and party 
members, it was an ambitions 
chall enge to the Communist 
Party and Government, in Hue 
with calls in recent months 
for toe liberalisation of toe 
media and wholesale reform 
of the economy and political 

While asking deputies to 
demand a greater role for 
Parliament, toe letter also 
said they should call for free- 
dom of toe press, guarantees 
tor personal freedom, 
“market control ” of most 
economic activities and equal 
opportunities for toe state 
and private sectors of toe 

The most senior official to 
sign the “open letter” was 
Mr Laszle Antal, director of 
a finance ministry research 
institute which has recently 
called for far-reathing 
economic, and political re- 
forms in Hungary. Other 
signatories included econo- 
mists, sociologists, historians 
and film-makers, such as Hr 
HUdog Jancso. one of 
Hungary’s best known direc- 
tors. Fewer than 20 of toe 
signatories were political 

Mr Ferenc Koszeg, an oppo- 
sition historian who helped 
draft the “ open letter ” said 
It could have gained 360 sig- 
natures hut that this was not 
toe aim. Its greatest weakness 
he said was the lack of com- 
pany managers among the 
signatories. “ We do not yet 
have toe connections,” he 

The ornate Hungarian Par- 
liament yesterday was again 
siiatgn out of its customary 
torpor. Mis Erika Sritesa, a 
non-communist deputy* chas- 
tised tile Government for 
allegedly setting aside an un- 
accounted chunk of the cur- 
rent budget to pay off last 
year’s deficit 

Mrs Sritea, a doctor, said 
She could not vote for the 
austerity programme unless 
toe Government made several 
changes. The austerity BOl 
however was expected to be 
adopted yesterday evening de- 
spite some opposition votes. 


MR PIERRE JUQUXN - , leader 
of toe reformers in the French 
Communist Party, is expected 
to prm/m nre next month his 
decision to run In the presiden- 
tial election next year. 

This would embarrass and 
anger many in the party, which 
has already picked its presiden- 
tial candidate and is straggling 
to halt its electoral decline. Mr 
Juquin, who resigned from the 
party’s central committee last 
summer, would directly chal- 
lenge Mr Andri Lajomre, toe 
official Communist candidate, 
seen by many as the chosen 
successor erf Mr Ge orges 
Marchais, toe partes secretary- 

During toe past two years, 
Mr Juquin has led toe dissi- 
dent movement of the “reno- 
vators" in the party, whi rfx is 
campaigning for a shift from 
the party’s traditional hardline 
Moscow-oriented policies. The 
Communist leaders have made 
every effort to silence toe dissi- 
dents and have vehemently 
opposed toe intended dlift, by 
which toe party might reclaim 
some popular appeal by becom- 
ing more democratic on its 
internal s tr u ct ures and more in 
tune with the recent social and 
economic evolutions in France. 

Mr Juquin plans to seek toe 
support of not only discontented 
Communist voters but also of 
adherents of such smaller move- 
ments of toe tor left as toe Uni- 
fied Socialist Party, plus the 
greens, and voters of Arab 
and immigrant origin. Minority 
ethnic communities in France 
are worried by toe attitude and 
electoral prospects of toe 
National Front. 

Mr Jean-Marie Le Pen, its 
leader, is expected to win 10 to 
15 per cent of toe national vote. 

JpqnbK unofficial c a ndi d ate 

However, his advance could be 
undermined by what appears to 
have been a big political 
blunder this week when he 
suggested that toe Nazi gas 
chambers were only a “detail 
of history.” This provoked a 

political storm, condemnation 
by all toe main parties and a 
demonstration outside the 
National Assembly yesterday to 
seek toe lifting of Mr Le Pen’s 
parliamentary immunity. 

Mr Juquin b hoping to gain 
about 5 per cent of toe vote, or 
at least to do as well as the 
official Communist candidate. 
His gamble in deriding to run 
against toe official candidate 
seems part of toe drive for 
change in the party. If he were 
to mount a viable challenge to 
toe official candidate, toe tradi- 
tional hardliners in toe party 
might well Stave to reassess 
their attitude to interne! 

THE IMMINENT accord by the 
superpowers, to scrap their 
Euro missiles will “change the 
landscape of European secu- 
rity,”, but should not . weaken 
the US commitment to defen q 
Western Europe,- Lord Caning, 
ton, the Nato secretary general 
said yesterday. 

“ Flesh and blood,” said Lord 
Carrington referring to the 
326,000 US troops stationed in 
Europe, “count for mare 
abstract deterrent concepts." At 
the same time, he said, the 
Intermediate Nuclear Forces 
treaty discussed- by US and 
Soviet foreign ministers in 
Washington this week would 
leave Europe " less nuclear, but 
not de-susclearised.” Retention 
of some nuclear weapons 
remained key to Nato strategy, 
he said. 

Speaking to the Royal Insti- 
tute of International Affairs in 
London, Lord Carrington 
appeared to be launching a bid 
to use his last year in office as 
Nate’s most senior official to 
ease Western Europe’s tran- 
sition to a post-INF treaty 

On the one hand, he sought 
to reassure European conserva- 
tives, in government and in 
uniform, that removal of some 
300 US Pershing and cruise 
missiles in an INF accord 
would not lead down “ the 
slippery slope of de-coupling” 
the US from Europe. 

*cs : 

Balladur under attack for 
privatisation conduct 


Government is coming under 
attack for its conduct of the 
programme to privatise 65 state 
sector companies— until now Its 
least disputed political success. 

Mr Edouard Balladur, the 
Finance Minister, yesterday 
reacted angrily to toe accusa- 
tions of .Mr. Pierre Joxe, parlia- 
mentary leader of toe opposi- 
tion Socialist Party, that a small 
group of people had "used toe 
apparatus of the . state to the 
profit private interests.” 

Mr Balladur, who has pre- 
viously greeted criticisms of 
his privatisation techniques 
with equanimity, challenged Mr 
Joxe to back up bis charges 
about the "scandal of the 
privatisations.” Mr Joxe 
declined to meet toe minister. 

The Socialists have hitherto 
had little success in attacking 

political allies in these bard 
cores. He claimed that so far 
52 separate groups had received 
stakes in toe hard cores, and 
that no group bad received 
more than, two stakes. 

Carrington: "Flesh and 

But Generate des Eaux, for 
example, the cash-rich leading 
French water supplier, has 
stakes in four, of toe newly pri- 
vatised companies, white toe 
new board of Havas, too. adver- 
tising group privatised In May, 
looks like a roll-call of the 
friends and relations of Mr 
Ballad nr ’s RER party. ; 

Yesterday’s nomination of Mr 
Ambroise Roux asfoture presi- 
dent of Generate Ocddentale 
provided further' ammunition 
for critics of toe domination of 
the newly privatised' companies 

by a “Balladur gang.” 

There was. he said, "no 
special magic” about INF 
forces. Nato had operated its 
flexible response strategy before 
toe INF missiles started arriv- 
ing in 1983. and could do so 
after they left 
On toe other hand, he seemed 
to be wanting Europe's arms 
control lobibes and peace move- 
ments against euphoria about 
"some mythical non-nuclear 
Nirvana.” Nato needed, he 
•aid. Id cany out its 1983 de- 
cision to upgrade short-range 
battlefield nuclear weapons, and 

partly so that West Germany be 
not be left as the sole deposi- 
tary of all of Western Europe's 
remaining non-etrategic nuclear 
firepower, nuclear-capable air- 
craft flown other countries such 
as Britain would become all toe 
more important 

Lord Carrington recognised 
that relying more on the "flesh 
and blood” deterrent of US 
troops in Europe begged toe 
question of whether the alliance 
could solve its burden-sharing, 
arguments and whether Europe 
could persuade toe US to malar ■ 
tain its troop presence by doing ' 
more in its own defence. 

If Americans came to think 
their contribution was charity, 
then Nato was in trouble, he 
warned. "There is nothing more 
unlikely than the survival of 
Nato if it were felt by toe 
North Americans that they were 
doing a favour to the Euro- 
peans out of friendship and 

mAll nnfiiWA *■ C* knw 


the privatisation programme for 
selling off toe fondly silver or 
for fixing too low a price for 
the companies to be sold. Sup- 
porters of Mr Raymond Barre, 
the rival to the right of Mr 
Jacques Chirac; the Prime 
Minister, have also criticised 
the Bidladur’s distribution of a 
“hard core” of stable share- 
holders. Mr Joxe and Hr 
Pierre Beregovoy, toe former 
finance minister, now appear to 
have begun a concerted assault 
on the M cronyism ” theme. 

The dispute focusses on toe 
"hard cores” of shareholders 
which Mr Balladur has selected 
ahead of the main public share 
offer for each of toe main pri- 

The minister recently defen- 
ded himself against toe charge 
that he had mainly placed his 

Mr Roux, president of Com- 
pagoie Generate des Eaux 
before Its nationalisation in 
1982, hired Ur Balladur to head 
one of the telephone group’s 
subsidiaries in 1977. GCE, now 
restored to toe private sector 
and chaired by a friend of Mr 
Chirac, in July bought toe con- 
trolling stake in Generate 
Occidental© from Sir James ; 

Mr Balladnr believes that it 
was necessary to create the 
hard cores in order to protect 
the newly floated companies 
from immediate takeovers. 

Using "golden shares" to pro- 
tect against undesirable raiders 
would only put off the problem 
by a few years, Mr Balladur 
believes, although he has 
created golden shares for a few 
companies, mainly in the 
defence sector. 

good nature,” he said. So far, 
US administrations had firmly 

US administrations had firmly 
believed European security to 
be vital to US security. 

Goria’s Gulf fleet hopes ] Agnelli speaks 



Italian Prime Minister, will be 
hoping for a public welcome for 
his Government's decision to 
send a naval taskforce to toe 
Gulf when he meets Mrs 
Margaret Thatcher, the British 
Prime Minister, in Downing 
Street today. 

Mr Goria and his colleagues 
have been distressed by the 
absence of any visible apprecia- 
tion from leading allies for the 
I talian contribution to maintain- 
ing freedom of navigation 

The eight-vessel task force set 
sail test Tuesday after an 
anxious farewell, not only from 
the relatives of the, 1,200 crew 
members, bat also from Italian 
politicians. The most notable 
exception was toe Italian Presi- 
dent, Francesco Cossiga, whose 

personal opinion of the venture 
is unknown but who failed to 
send the crews any message of 

Ministers feel that allied 
governments hove failed to 
understand and appreciate the 
political ordeal to which the 
five-party coalition subjected , 
itself once It decided to send 
toe task force. 

Opposition came not only 
from toe Communists and other 
points further to the left, but 
also from the Catholic world of 
charities and social organi- 
sations. This, In turn, was 
reflected within the dominant 
Christian Democratic party, 
most of whose members would 
be greatly relieved if any 
reasonable pretext could be 
found for recalling the small 


Fiat chairman, yesterday broke 
bis silence on the Italian arms 
scandal which has seen the 
arrest of a dose friend and 
business coHeague — Mr Ferdin- 
ando Borletti— on charges coo* 

I cenring the clandestine ship- 
ment of mines to Iran. 

Mr Borletti, released provi- 
sionally on Monday after ten 
days in prison, is chairman of 
ValseHa Meccan otecnica, the 
Brescia arms company accused 
of involvement in toe scandal. 
Valsella is 50 per cent owned 
by Fiat and Mr Borletti is on 
the main board. 

Mr Agnelli said in Rome yes- 
terday; “As far as toe investiga- 
tion by magistrates I obviously j 
cannot Interfere. What I can | 

say Is that I have known Bop 
letti and his family aH my life 
and have given our full confi- 
dence to them and also the 
management responsibility" 

• Mr Giuseppe SantanieDo, toe 
I t a l ia n parliament’s media 
watchdog, has told a parliamen- 
tary commission that the Fiat 
group is in violation of Italy’s 
laws on press ownership be- 
cause it controls both La 
Stamps, the Turin daily, and 
indirectly the Rizzoli group 



ALBANIA and West Germany 
have formally agreed to estab- 
lish diplomatic relations, 
signalling Albania's further 
opening to the West 

The announcement, made 
In the Albanian capital of 
Tirana and in Bonn earlier 
this weds, follows yeans of 
negotiations between toe two 
countries in Vienna. 

One of the main obstacles 
to establishing relations 
centred on West Germany’s 

m willingness to pay war 
reparations. Diplomats in 
Vienna who have been follow- 
ing toe negotiations said the 
question of reparations had 
been overcome, bat could 
give no more details. 

The establishment of rela- 
tions with West Germany 
follows a recent spate of 
diplomatic activity by toe 
AffranfaH Government Last 
week, Albania established 
diplomatic relations with 
Canada. In August the Greek 

Government ended the state 
of war with Albania imposed 
40 years ago, opening toe way 
for a rapprochement. Tirana 
also recently established rela- 
tions with Bolivia and Spain. 

The cautious ope ning by 
this small Balkan country of 
8m people to toe outside 
world is largely due to the 
policies of Mr Ramra Alla, 
toe leader o ftfae Albanian 
Communist Party. He suc- 
ceeded Mr Enver Hoxha, who 
died in April 1985. After Hr 

Wnrfra broke relations with 
the Soviet Union In the 19608 
and with China In 1970s, toe 
country moved into a period 
of isolation which has ham- 
pered economic development. 

In a policy speech to toe 
central committee in July, 
Mr Alia said that “oar foreign 
policy, oar development can- 
not be separated from toe 
events in too world.” 1 

Me then criticised toe 
performance of some sectors 
of the economy, saying that 

export earning! wore not 
high enough to boy necessary 
new technology to develop 

The establishment of re- 
lations with Bonn wiQ give 
Albania greater access to 
marketed Mr AUa, however, 
insisted that the country's 
independence and political 
system would not bo com- 
promised by. ooy foreign 
policy initiatives. 

' Meanwhile, negotiations to 
improve relations between 

Britain and Alania continue. 
Albania Is unwilling to pay 
damages for British warships 
which were mined in toe 
Corfu channel In 1946 and 
Britain refuses to return to 
Albania $76m worth of gold 
bold since die war against 
the British rtatom. 

Diplomats In Henna say 
they are “a little more opti- 
mistic” about the future pro- 
gress of these ftalks now that 
the question of Gorman war 
reparations has been settled. 



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Financial Times Friday September 18 1987 


Norway blocks sale of missiles 

NORWAY has rejected a request fay 
state arms manufacturer Kangs* 
berg Vaapenfabrikk -(KV) - facing 
US anger over' technology sales to 
Moscow -to sell missiles to four de- 
veloping nations, government offi- 
cials sail yesterday. Barter reports 
from Oslo. 

Defence industry sources warned 
that the move could cripple sales of 
KVs Penguin short-range missiles, 
its most actively marketed product, 
and push the company closer to 
bankruptcy. - 

KV posted an NKrlJbn (SI 65m) 
loss in the first half of 1987 and is 
being restructured to save its weap- 
ons division. The company had 
sought permission to sell the mis- 

siles to 'Venezuela, Singapore, In- 
donesia and Thailand. 

“We turned down the application 
because we don’t want to become a 
major weapons exporter - and the 
more we export the more difficult it 
is to ensure the weapons slay in the 
right hands," a Defence Ministry 
spokesman said. 

Norway restricts the sale of mili- 
tary equipment to feUow members 
of Nato and the Organisation for 
Economic Co-operation and Devel- 
opment {OECD). 

The Defence Ministry dented that 
the decision was Jinked to KVs 1982 
and 1983 sales of computer gear, 
used, on mining machines from a 
subsidiary of Toshiba of Japan, to 
Leningrad shipyards. 

Washington defence experts have 
said the sales, in breach of Norwe- 
gian export low, damaged Western 
security by enabling the Soviets to 
make nearly-silent submarine pro- 1 

Norwegian police are investigat- 
ing all KV exports to see if there 
have been other illegal sales. 

The US navy is testing the Pen- 
guin mi ssiles for use on helicopter 
gunships. The deal, if approved, 
could earn KV about SlOOm. 

However, government and diplo- 
matic sources in Oslo said a deal 
could be blocked by Congress. The 
Senate has already verted a punitive 
ban on all trading with KV and 

Awacs scan Nato’s borders 
with airborne electronics 

SOARING above the barren moun- 
tains of central Norway, Nato radar 
operators scanned screens alive 
with tiny green blips in a constant 
search for unidentified aircraft 
penetrating allied airspace. Renter 
reports from Oslo. 

Oblivious to the bright light and 
high-pitched whining of computer 
consoles filling the plane, they were 
part of a 17-man crew cm the first 
flight to cany reporters aboard- a 
Nato Awacs-aircraft 
“Awacs (Airborne Early Warning 
and Control System) are one of the 
strongest cards held by the Western 
alliance in the age of electronic 
warfare,” US Air Force Maj David 
Schmidt mM- 

They gather their- information 
through sensitive -electronics sys- 
tems packed in an ungainly, mush- 
room-shaped dome perched just in 
front of the tail of this military ver- 
sion of the’ Boeing 707 passenger 

Officially known as the NAEW 
force (Nato Advanced Early Warn- 
ing and Control Force), the aircraft 
are manned by crews drawn from 
U of Nato's 16 member nations. 

Awacs were developed by the US, 
in the 1970s in response, to Soviet 
deployment of -aircraft .and craise 
mMes; designed- to escape detec- 
tion by conventional ground radar 
stations as they hog the terrain dur- 
ing fli ght. 

"These are basically airborne rad- 
ar platforms looking down to spot 
low-flying aircraft Our mission is 

purely one of defensive surveil- 
lance” Maj Schmidt said. 

From a cruising altitude of 29,000 
ft they command a view of all air 
and sea traffic over an area of some 
-312#Q0sq km. keeping 20 nautical 
miles from Warsaw Pact borders. 

Despite their advanced surveil- 
lance equipment, they would make 
easy targets if caughtunescorted in 
a conflict 

“In theory, you cant sneak up on 
an Awacs. But they carry no weap- 
ons, and would be sitting ducks if 
attacked," said Maj Schmidt 

Nato has since 1082 maintained a 
fleet of 18 Awacs; based at Geilen- 
kfrehen, West Germany, and with 
regular flights out of Italy, Greece, 
Turkey and Norway’s Oerlandet Air 

Nonray, to keep East-West bor- 
der tension low, bans foreign mili- 
tary flights within 75km of Nor- 
way's bonier with the Soviet Union. 

But even at this distance we can 
peer into Soviet territory to watch 
flights f ro m military airfields on 
the Kola Peninsula," said Orelandet 
base commander, Lt-Col Ivar Ue- 

Information on their screens can 
be fed via satellite to the ground 
and naval forces, leaving the deci- 
sion on how to respond to a possible 
incursion to the high command of 
the nations whose air space they 
are patrolling. 

Their r egular missions over Na- 
to’s northern flank play an integral 
role in monitoring Soviet air traffic. 


■*1 ' ii? .■ 


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And ask 

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for details. 



22, 23, 24 September, 1987 

invites you to meet over 40 international companies 


Meet the management of leading 
V companies at Roundtables, 
chaired by analysts of 
UK and US investment firms. 

INSURANCE — 22 SEPT - 11am 


23 SEPT- 9am 

23 SEPT- 1pm 

Attend corporate presentations 
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THUR 24 SEPT - 9.0Cam-3.00pm 


Alexander Nicholl reports on a plea for finance to back poor nations’ reforms 

Greater effort urged to ease debt problem 

notifying Norway's air fence of fre- 
quent Soviet intruders. 

"We send up fighters nearly every 
other day to intercept Soviet air- 
craft, often Bear-class reconaiss- 
ance planes, who stray too for west 
or too far south into Norwegian air- 
space," said Lt-Col Ueland. g 

l nte m>ptH>p us ually moanw irfe n t- ' 
ifying and photographing Soviet I 
aircraft, after which they are ush- 
ered at dose range back into inter- 
national air space. 

Flights over central Europe, be- 
cause of heavy commercial traffic, 
are easily the most ^wmirfing on 
Awacs crewmen. 

“On busy days, we'll see up to 450 
blips on our screens," one US crew- 
man said. "But that gives us plenty 
to do, and is a lot more interesting 
than flights over eastern Turkey, 
where there's almost nothing to 
look at,” he added. 

Despite the impressive array of 
electronic equipment packed into 
the windowless fuselage, officers 
said all the hardware can be bought 
over the counter in most Western 

But an Awacs S150m price tag 
would likely discourage even the 
most dedicated electronics enthu- 
siast from tackling such a project 
Missions usually last eight days, 
including numerous fuel stops. 
Even with mid-air refuelling, an 
Awacs can stay aloft no longer than 
24 hours, and rarely more than me 
third of the fleet is airborne at any 
given time. 

THE World Bank calls today 
for stepped-up and Integrated 
efforts to tackle the debt prob- 
lems of developing countries. 
Debt it says, Is “a major 
obstacle that must be cleared 
from the development path.” 

In Its annual report for the 
fiscal year ended June 30. the 
Bank says that both heavily in- 
debted middle income coun- 
tries and low income nations in 
sub-Saharan Africa have been 
particularly hurt by the recent 
economic climate even though 
many in both categories have 
been pursuing policy reforms. 

Slow growth in (industrialised 
countries, worsening terms of 
trade and volatile interest rates 
have caused slow growth in 
middle-income economies. 

“Adjustment programmes in- 
volve difficult choices for gov- 
ernments, and political support 
cannot be sustained unless 
adequate finance needed to 
implement these programmes 
is made available,” the Bank 

It says commercial banks 
have made very few new finan- 
cing commitments, and that 
mufti-year rescheduling agree- 
ments have not become toe 
financial underpinning for ad- 
justment programmes. 

“ It is all the more necessary, 
therefore, that efforts aimed at 
ameliorating toe debt problem 
be integrated and that the en- 
tire arsenal of available instru- 
ments be employed.” 

Though these instruments in- 
clude debt/equity swaps, the 
Bank cautions that too much 
should not be expected of them. 
Only 1 to 2 per cent of the debt 
of major debtors was traded in 
1886, it says. 

The Bank urges more multi- 
year reschedulings, official ex- 
port credits as well as other 
measures and stresses that all 
parties — both governments 
and banks — should play their 

Though toe Bank praises toe 
governments of many sub- 
Saharan countries for their per- 
sistence and depth of their 
policy reforms, it says that toe 

Barber Co nable: seeking 

capital increase 

“ institutional and political con- 
straints, the social costs, and 
the financial requirements to 
sustain toe reform process con- 
tinued to mount.” 

A Bank study shows that 
several such countries will still 
face GDP growth below the rate 
of population growth in the 
next three years and many will 
have stagnant or dedniing per 
capita consumption. “Substan- 
tial additional resources are 
urgently needed, particularly, 
but not exclusively, for toe debt- 
distressed countries among 

A World Bank official said 
that a Joint IMF/World Bank 
study to be considered by the 
Development Committee at the 
annual meetings of the two 
organisations beginning next 
week shows that “ debt- 
distressed” nations in Africa 
need $L5bn annually In 
order to reduce their debt 
service down to a manageable 

Britain has proposed a debt 
relief scheme for Paris Club 
sovereign creditors of the 

poorest nations, but this has 
run Into opposition from some 
other industrialised countries 
which object to lowering 
interest rates. 

The Bank dearly believes 
that it has been playing its 

part in financing troubled 
debtors. World Bank commit- 
ments to the 15 heavily- 
indebted countries covered fay 
the US-sponsored Baker Plan 
have exceeded SSSbn since 
1981, of which almost half was 
in toe past three fiscal years. 
Disbursements have accele- 
rated because a growing 
number of loans have been 
quick-disbursing. The Bank’s 
lending to the poorest coun- 
tries rose 9 per cent in the 
last fiscal year to $6.4bn. 

In the past fiscal year, new 
loan commitments by the World 
Bank and its International 
Development Association affi- 
liate rose 8 per cent to 817.7bn. 
The Bank’s were up 7.7 per cent 
at S14ffbn. 

Disbursements by the Bank 
rose quite sharply, up $3.1bn at 
$lL4bn, because of a growing 
proportion of fast-disbursing 
adjustment loans. IDA disburse- 
ments fell $67m, however, to 

When maturing loans are 
taken into account, the net 
transfer of resources to bor- 
rowers fell from $2.8bn to 
$2.4bn despite the big increase 
of disbursements. 

The Bank expects its new 
commitments to be between 
$14bn and $15. 5 bn this fiscal 
year and the IDA’S about $4J!bn. 
Over the next few years, new 
Bank commitments are expected 
to rise to an annual rate of 

The Bank, however, is increas- 
ingly conscious that it will soon 
run up against capital con- 
straints and has therefore begun 
sounding out major indue- 
totalised governments on a sub- 
stantial capital increase, officials 

The Bank’s “headroom” to 
make new loans is being increas- 
ingly restricted by the fall of 


Loans approved 
Total income 
Net income 

General reserve 
Net borrowings 
Subscribed capital 

Borrowing countries 
Member countries 
Higher-level stiff 


Credit amounts 
Usable resources, 

Borrowing countries 
Member countries 

the dollar which raises the 
value of many of its loans which 
are denominated in strong non- 
dollar currencies. The Bank’s 
lending is not allowed to exceed 
its capital, which is denominated 
in dollars. 

Committed capital is cur- 
rently $90bn, and lending some 
$76bn, giving headroom of 
$I4bn. The situation is not yet 
urgent because net disburse- 
ments are expected to total 
only about $4bn anually over 
the next couple of years. 

Mr Barber Conable, toe 
Bank's president, has been talk- 
ing of a $60bn to $80bn capital 
increase and has met a favour- 
able response from European 
and Japanese governments for 
a fairly prompt capital boost, 
officials say. However, the 
main stumbling block will be 
the US, where appropriations 
from Congress are chronically 
difficult to obtain. 

Among other features of the 
Bank's report are: 

• The Bank took a $57m 
special charge for costs of its 

Fiscal year 







$ millions 




































































$ millions 






































internal reorganisation, which 
is detailed in the report Par 
ticularly illustrative is a list 
of the Bank’s senior executives 
as at the end of 1986. and a 
second list as at June 30 1987. 
showing many changes and 
some vacant slots. 

• A review of structural adjust- 
ment lending — non-project 
loans introduced in 1980 in sup- 
port of structural reforms of 
an economy — shows a mixed 
experience. None of toe 10 
countries surveyed fully imple- 
mented planned reforms on 
schedule, but budgetary per- 
formance and pricing policies 
generally improved over time. 

Some facilities were too com- 
plex and some ran too far ahead 
of government commitment to 
economic reform. However, 
such loans were effective in 
providing quick • disbursing 
funds, in focusing governments* 
attentions on structural prob- 
lems and in giving toe Bank 
a means to support economic 
reform in a way that project- 
lending could not. 

Our pension policy 

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Financial times Friday September 18 1987 

Brazil ‘stands 
firm on debt 



BRAZIL WILL bold fins on Jts 
interest payments moratorium 
as it tries to convince banks 
that the time has come for an 
innovative long-term, solution to 
the five-year-old debut crisis, 

Mr Luiz Carlos Bresser Pereira, 
the Finance Minister, said. 

Brazil would meet its inter- 
national private creditor banks 
next Friday to negotiate a long- 
term solution to the debt prob- 
lem that "assures growth and 
price stability for Brazil, the 
reintegration of the country in- 
to the international financial 
markets and oilers a reasonable 
solution to the banks," he said 
in an interview on Wednesday. 

The interview followed a 
brief International tour in. 
which he presented a radical 
plan to convert half of the coun- 
try’s $68bn bank debt into 
bands — a plan that received 
a brisk rebuff from creditors 
and particularly from Mr James 
Baker, the US Treasury Secre- 
tary. The Finance Minister 
agreed with Mr Baker that 
Brazil would adopt a more con- 
ventional approach. 

Mr Bresser Pereira said that 
President Jose Samey did not 
want an agreement that has to 
be reworked shortly after it is 
completed. “ Brazil wants inno- 
vation, but is not interested in 
changing the world" 

What separated Brazil from 
the international .financial com- 
munity were not the 'radicals 
and nationalists, who are . not 
as strong as they are vocal,” 
he said, but the debt itself and 
“ the conservative and n on- 
imaginative approach to the 
problem from banks and their 
governments." - 

A solution to the debt burden 
should include a fixed- rate of 
interest according to a country's 
capacity to pay over the long 
term. Because more than. 50 per 
cent of the public deficit in Bra- 
zil was interest paid on public 
sector foreign debt, it was “diffi- 

Biden ‘will not back out 
of presidential race’ 


44-year-old Democratic presi- 
dential candidate who has been 
charged in newspaper and tele* 
vision reports with plagiarising 
; in his campaign parts of 
speeches by, amongst others, 
Neil" ' Rmnock, the British 
Labour leaden insisted yester- 
day that be had no intention of 
backing out of the race. 

At a press conference yester- 
day morning. Senator Biden ad- 
mitted, however, that as a 
young law student he had also 
been accused of plagiarism by 
the academic authorities at 
Syracuse Law SchooL 
“I was wrong, but I was not 
malevolent in any way," Sena- 
tor Biden said, suggesting that 
the presentation as bis own 
work of a legal brief based on 
a published law review article 
had been the error of an inex- 
perienced law student 
Senator Biden and his poli- 
tical advisers bad been hoping 
that if he performed success- 
fully during the televised hear- 
ings into the contentious nomi- 
nation of the conservative Judge 
Bork to the Supreme Court — 
Biden chairs the Senate Judi- 
ciary Committee — this would 
inject new life into bis presi- 
dential campaign and enable 

him to emerge as a national 
figure from the apck of Demo- 
crats pursuing the presidency. 

Americans take questions of 
cheating and plagiarism at 
college seriously. . It Is parti- 
cularly embarrassing for-Sena- 
tor Biden to have questions 
raised about his honesty when 
he is chairing hearings into 
whether to confirm Judge Bork. 

Senator Biden who has made 
it dear he opposes the Bork 
nomination is a presidential 
candidate who has been hoping 
to gather support amongst 
liberal Democrats, who fiercely 
oppose Judge Bork on the 
grounds that he will tat the 
Supreme Court to the right, 
particularly on social issues. 

Senator Biden’s ability to 
lead the opposition to Judre 
Bork will be weakened to the 
extent his own credibility is in 
question and there has even 
been speculation that be might 
be forced to resign as chairman 
of the Judiciary Committee. 

In response to the ch.uges of 
plagiarism. Senator Biden said: 
"I have never quoted anyone 
without saying this is their 
quote, it is because. . . it is 
clearly known by everybody 
what it is or I honestly did not 
know I was quoting somebody 

Central American peace 
talks open amid optimism 


A KEY meeting which could 
determine the progress of the 
month-old Central American 
peace plan opened amid 
optimism in Managua yester- 
day. This was in spite of US 
plans to press on with a fresh 
demand for $270m in aid for 
the anti-San dinista Contra 

The peace plan, first drawn 
up by Costa Rican 1 President 
Oscar Arias, provides for cease- 
fires in the region'? wars, 
amnesties, - deroocratisation, a 
halt to outside aid for insurgent 
groups, and pledges not to 
allow such forces the use of 
Central American territory. 

Central America's - five 
foreign ministers, along with 
senior officials from eight other 
Latin American countries are 
meeting representatives of the 
United Nations and the Organi- 
sation of American States 
(OAS) to plan ways of monitor- 
ing the treaty’s progress: 

The ministers are discussing 
some of the peace pact's 
thorniest problems — who 
should be eligible for . the . 
amnesties each government is 
due to offer, and how to Imple- 
ment the treaty's call for an 
en dto all aid to insurgent 
guerrilla forces. - 

Equally complex is. the 
accord's provision that all five . 
countries will enforce their • 
commitment simultaneously : on . 
November 7. 

An international - verification 
commission, comprising tbe . 
Central American nations them^ 
selves, the Contadora Group 
countries (Mexico. Venezuela, 

Colombia and Panama), its sup- 
port group (Argentina, Brazil,- 
Pern and Uruguay), the UN and 
the OAS is due to ensure and 
judge compliance with - the 

Despite the Central American 
presidents’ intention to demand 
an end to aid for irreguUr 
forees. President Ronald 
Reagan last week announced 
he would soon ask the US Con- 
gress for further funding for 
the Contras. 

Should that money start flow- 
ing before the Arias plan’s 
November 7 deadline, it would 
kill Che accord stone dead, 
officials throughout Central 
America agre. 

The treaty’s insistence that 
no Central American country 
should allow its territory to be 
used by guerrilla groups is 
aimed especially at Honduras, 
hosting the Contras, and at 
Nicaragua. The US has regu- , 
larly accused tbe Sandinsstas of 
aiding tbe “ Farabundo Marti " ' 
guerrillas in £1 Salvador. 

This week’s talks were ex- 
pected to provoke a flurry o! 
charges and counter-charges 
amongst the five governments 
over who is doing what to -un- 
dermine the other. 

Interpreting the pact s call 
for an amnesty is alsi likely 
to prove difficult In Nicaragua, 
for example, opposition leaders 
are arguing that the govern- 
ment must offer amnesty not 
only to Contras in the Held will- 
ing to hand in their weapons, 
but also to all political prison- 


cult, almost impossible, to put 
our house In order.” 

Brazil wanted better condi- 
tions than those obtained by 
Mexico, Argentina and the 
Philippines!!. The Brazilian pro- 
posal is to include a conven- 
tional aspect and a voluntary 
alternative to convert debt to 

To stress his point that the 
banks should seriously consider 
opting for bonds, Mr Bresser 
Pereira stated that Brazil issued 
$6bn in bonds in the 1970s 
which were being fully serviced 
on principal and interest and 
which the countiy has never 
considered not honouring. 

Because Brazil was interested 
in concluding the negotiations 
soon, there would be no sym- 
bolic interest payments to the 
banks, so that they were "firmly 
convinced that they have to 
make concessions compared to 
what they’ve agreed to pre- 

"We really want to have a 
solution. Downgrading the bank 
loans would hurt them unduly, 
be said, referring to a deadline 
□ext month at which the US 
authorities may downgrade Bra- 
zilian loans to "value-impaired" 
status, forcing new loss provi-< 

On the IMF, the minister said 
that he would like to make an 
agreement, but that he did not 
want any linkage with the dis- 
bursement of bank funds. He 
indicated that Mr Baker had 
agreed to the "no linkage" idea 
and that an agreement with r k » 
banks would precede talks w *\ 
tbe IMF. 

On the economy, the country 
needed no new money to fin- 
ance the balance of payments 
if interest payments were not 
resumed. Despite tbe recent 
success in bringing inflation 
down from 25 per cent to 6 per 
cent a month, he said that the 
current level was still too high 
at 6 per cent, but that attempts 
would be made to control it 

Ford and 
UAW agree 
pay deal 

Motor and the United Auto 
Workers union agreed yes- 
terday to a three-year con- 
tract giving greater job 
protection and pay increases 
to 104,606 US autoworkers, 
the UAW said, AF reports 
from Michigan. 

The contract must be 
approved by local leaders and 
the union rank-and-file before 
going into effect. 

The UAWs national nego- 
tiations with Ford have been 
without a strike since 1976, 
when a dispute over paid 
personal holidays and -wage 
increases resulted In a walk- 
out lasting 28 days 

The UAW sought a settle- 
ment with Ford first In a 
tactic called pattern bargain- 
ing, seeking teh best deal 
possible from Ford as a 
pattern for negotiations with 
General Motors, 

GM’s contract has been ex- 
tended until a new deadline 
that will be set once Ford 
workers begin voting en a 
settlement. Both contracts 
had expired Monday night at 
11.59 pm. 

Job security has dominated 
the union’s demands this year. 
Ford, which has 164,000 UAW 
autoworkers, and GM, which 
has 335JKH) both import cars 
from Korea and Mexico are 
planning or producing can in 
Joint ventures with Japanese 

US teachers and parents agree there is 
room for improvement in education system 

THE PROBLEMS faring many US 
'teachers in the country's struggling 
inner-city schools have been given 
another airing as some teachers 
have secured substantia! pay rises 
in this year's contract round while 
others, notably in Chicago and De- 
troit, have taken part in acrimoni- 
ous strikes. 

Despite a move in most states 
since 1983 to boost teachers’ sala- 
ries, many inner-city education 
boards are still failing to attract col- 
lege leavers to the job. 

- La Chicago, where more than 
25,000 teachers are on strike, the 
city's ninth stoppage in the past 20 
years, the union says it is frustrated 
with what it sees as a disproportion- 
ate amount of cash spent on educa- 
tional administrators rather than 
on teachers. 

Both sides in the dispute are fur- 
ther apart than in previous years, 
with the union demanding a 10 per 
cent rise in the first year of a two- 
year contract and 5 per cent the 
next, while the school board tries to 
cut three days off the school year in 
a bid to reduce salaries. 

This contrasts with a speedy end 
to contract negotiations in New 
York, where the city has promised 
an additional $9 10m in funds to in- 
crease teachers' starting salaries by 
25 per cent to $25,000 over the next 
three years. The New York union 
says the latest increase - adding up 
to a 72 per cent raise for starting 
pay since 1983 - makes inner city 
salaries competitive with the sub- 
urbs for the first time. 

Deborah Hargreaves in Chicago reports on education 
problems in the US: a subject of wide concern in the 
run-up to the 1988 presidential campaign. Among the 
issues are classroom violence, and pay disputes. 

Teachers in Chicago and other 
urban public schools are, however, 
often paid more than their subur- 
ban counterparts. But notoriously 
difficult working conditions in the 
inner city, where drop-out rates are 
often as high as 50 per cent, will de- 
ter qualified candidates. 

"The working conditions are so 
poor, often money is the oniy incen- 
tive," one Chicago teacher cynically 

Given a competitive business en- 
vironment and a subsequent lack of 
candidates with the right qualifica- 
tions. some school boards have re- 
sorted to hiring under-qualified 
teachers, a spokesman for tbe 
American Federation of Teachers, a 
union group representing 680,000 
teachers nationwide, commented. 

He recounts one incident of a 
school board testing prospective 
teaching candidates; more than half 
foiled the test, but the board went 
ahead and hired many of these in 
order to get someone in the class- 
room before the start of the school 

Other school boards have cut 
courses such as biology and chemis- 
try because of the lack of qualified 
science and maths teachers. School 
auriculae are determined on a local 
basis although some states impose 

a state-wide mandate. 

College leavers can often be put 
off a career la teaching by tales of 
violence in city schools th at some- 
times reach legendary proportions. 
Indeed, almost half of city teachers 
responding to a recent survey by 
the Carnegie Foundation for the 
Advancement of Teaching (AFT) 
cited disruptive behaviour in tbe 
classroom as a real problem. 

Of those surveyed, 32 per cent 
said violence against students was 
a problem and 13 per cent were 
worried about violence against 

Mr Ernest Boyer, president of the 
Foundation, calls the survey’s find- 
ings disturbing; “teachers in the na- 
tion’s urban schools confront a 
shocking pattern of problems, rang- 
ing from disruptive behaviour in 
the classroom to the apathy of par- 
ents," he said. 

On (he other hand, in comparison 
to some of the conditions outside 
the classroom, some teachers stress 
inner-city schools are often oases of 
calm for urban children. Teachers’ 
unions agree that the reputation for 
violence among some innereity 
schools will discourage some pros- 
pective teachers. 

But individual teachers have for 
more complaints about a top-heavy 


The Lesser Group of Companies has acquired 
Astras eal Industries Limited - the first British 
company to have successfully launched a range 
of uPVC doors and windows in the UK. 

. To quote Group Managing Director, Michael 

ft We believe that the company is 
complementary to our existing companies ; and as 
uPVC door and window systems represent a 
tremendous growth area , we are totally confident 
abouttbe prospects and future success of 

The extensive experience of Lessees 
operational companies in construction, property 
development and manufacturing will be of 
considerable help in assisting Astraseal to achieve 
increased market share , turnover, and profit. In 
particular, •, it will actively seek business m the 
commercial sector where Pm certain that with 
the support we, as a Group, are able to give the 
company, it will become as successful as it is in the 
domestic sector, jy 

Astraseal will join Lesser Building_Systems as 
part of a newly created division within the 
Group — Lesser Building Products Limited. 

The Lesser Group 

Being Lesser known puts Astraseal and its ' 
licensees into an extraordinarily good company. 
The in-house resources of the Lesser Group 
cover all the management creative and technical 
disciplines and experience to attract more and 
more names in a wide range of business. _ 

Lesser clients range from local authorities to 
financial institutions and major retail groups. 

And with the Lesser name becoming better 
known, now is an excellent time for yours, to 
become Lesser known. 


administration and unnecessary 

Some 36 per cent of urban teach- 
ers surveyed by the Carnegie Foun- 
dation said they had no control in 
selecting textbooks and materials 
to use in the classroom. Many 
teachers say they find this lack of 
control and large class size (up to 35 
students per class in many cases) 

demor alising. 

With high drop-out rates in a lot 
of major cities - and some esti- 
mates putting the US illiteracy rate 
at one in five - educators and teach- 
ers do not deny that the system is 
failing large numbers of its pupils. 

To graduate from high school, 
teenagers must fulfill certain 
school-set requirements, for which 
they receive a graduation certifi- 

In an effort to restore a bit more 
foitfa to tiie public school system on 
the part of both teachers and stu- 
dents, educators have come up with 
a range of suggestions. 

These vary from merit pay for 
teachers who turn out skilled stu- 
dents to a scheme in Cleveland 
where pupils receive payment into 
a trust fund as a reward for achiev- 
ing high grades. 

Indeed, as education remains a 
subject of wide concern in the run- 
up to the 1988 presidential cam- 
paign, prospective candidates have 
already been voicing their own pet 
schemes for improving the system. 
And many teachers and parents 
agree there is still plenty of room 
for improvement ! 

US housing 
down by 1% 

By Nancy Dunne in Washington 
| US HOUSING construction, slowed 
by rising interest rates, fell by 1 per 
cent from July to August, figured on 
a seasonally adjusted basis, accord- 
ing to the US Commerce Depart- 

The drop apparently continues a 
downward trend, which began in 

The downturn had seemed to be 
pnriing last month when the Com- 
merce Department reported a 0.9 
per cent monthly rise in housing 

The report warns, however, that 
month-to-month changes in figures 
often show irregular movements 
and cautions that "it may take three 
months to establish an underlying 
trend for total starts." 

The four-month drop from March 
to June was an ominous sign of the 
run-up in mortgage rates in the 

It was the first decline for four 
consecutive months since 1981. 

In August about 1.58m housing 
units were started, 12 per cent less 
than the 1.85m started in August 

Construction of single-family 
houses fell 5 per cent during August 
while building of apartment bouses 
rose by 7 per cent 

The seasonally-adjusted annual 
rate of housing units authorised by 
building permits in August, a fore- 
casting tool of future growth, was 
unchanged during the month. 

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To: The Lesser Group of Companies, 
Harlequin House, 7 High Street, 
Teddington, Middx. TWl 1 8EH. 

Tel: 01-943 081 1 

Please tell me more about the Lesser Group of 
Companies ; 

Company Address . 


Tel No. 


Aquino accepts 

of key adviser 


PRESIDENT Corazon Aquino 
yesterday reluctantly accepted 
the resignation of Mr Joker 
Arroyo, her controversial ex- 
ecutive secretary, in an attempt 
to bring some “quiet" to her 
cabinet, which has been badly 
split since a failed coup on 
August 28. 

Bis resignation was widely 
demanded by businessmen and 
churchmen, who accused him of 
being obstructive and opposed 
to the pro-business policies that 
Mrs Aquino publicly backs. 

Large sectors of the military, 
including the leaders of a 
failed coup on August 28, 
accuse him of being a com- 
munist sympathiser and had 
also demanded his removaL 

Mrs Aquino kept a second 
controversial adviser, Mr Teo- 
doro Logs in, a legal counsel, as 
a consultant 

The cabinet changes follow 
Mrs Aquino's sacking on Wed- 
nesday of Finance Secretary 
Mr Jaime Ongpin. who has 
fougbt publicly with Mr Arroyo 
for much of this year over the 
direction government economic 
policy should take. The entire 
cabinet resigned eight days ago 
in order to give Mrs Aquino a 
free hand in forming a new 
government that can work as a 

“However, some businessmen 
criticised Mrs Aquino for 
choosing a close political ally 

and former classmate of Mr 
Arroyo as the new executive 
secretary. The post carries 
powers similar to a chief of staff 
in the US system and is con- 
sidered a powerful position be- 
cause it ensures close daily 
access to the President. 

In the TV address accepting 
the resignation, Mrs Aquino 
praised Mr Arroyo's "patriotism 
and true nationalism and 
promised not to compromise his 
ideals. Mrs Aquino had a deep 
personal loyalty to Mr Arroyo, 
dating from his time as a 
human rights lawyer when he 
defended her husband. Bemgno 
Aquino, and after the latter was 
assassinated in 1984. 

Some observers said that Mrs 
Aquino had merely changed 
faces in the cabinet r e s h u ff le, 
without defining the clear policy 
direction that businessmen say 
she is sadly lacking. 

Others say that she has not , 
done what was necessary to 
defuse the most serious attacks 

even though Mr Arroyo's , 

special relationship with Mrs 
Aquino will always guarantee , 
him close access. | 

Meanwhile, finance depart - 1 
raent sources said Mr Jose 
Fernandez, Central Bank I 
governor, who with Mr Ongpin. 
has played a central role in 
debt renegotiation talks, will 
retain his position for the time 

Defendants in Carrian 
case win legal costs 


TWO OF the six defendants 
acquitted in Hong Kong this 
week of conspiracy charges in 
the Carrian fraud trial were 
yesterday awarded legal costs 
for their three-and-a-half-year 
defence. These are likely to 
amount to over HK$40m and 
will have to be paid out of 
taxpayers' funds. 

This second blow to the Hong 
Kong Government's legal de- 

partment came as it was still 
licking its wounds from the 

licking its wounds from the 
shock aquittal of the six accused 
in what has gone into the his- 
tory books as the British Ter- 
ritory's longest and most expen- 
sive trial. 

Mr Justice Barker, who has 
presided over the trial for 64 
weeks, conrradlcted government 
lawyers who were challenging 
the appeal by defence counsel 
to be awarded costs when he 
ruled that neither Mr David 
Begg nor Mr Anthony Lo, the 
first a partner in, and the 
second an employee of, Price 
Waterhouse, Carrian's auditors 
had brought suspicion on them- 
selves nor misled the prosecu- 
tion as was claimed 

The precise total to be 
awarded to the acquitted men 
has yet to be decided, but is 
expected to be between 
HKS40m to HK$50m. 

Carrian, headed by Mr George 
Tan, had grown meteorically 
between 1977 and 1983, only to 
collapse spectacularly when the 
local economy floundered late 
in 1983. Debts amounted to 
about HKSlObn. 

Sensation was heightened 
first by a murder and a 
mysterious suicide. Scandal 
spread to Malaysia when it was 
discovered that Bumiputra 
Malaysia finance, a subsidiary 
of Malaysia's biggest bank, had 
lent huge loans to Carrian. 

In the wake of the collapse. 
Bank Bumiputra had to be 
rescued by Malaysia's nationa- 
lised oil company and a number 
of government officials and 
ministers were tainted. 

The Carrian trial lasted for 
281 days, Involved 25,000 pages 
of prosecution transcripts and 
cost the Hong Kong Govern- 
ment about HK$27m to 


Securities designated (SE) and (USM) are dealt in subject to the rules 
and regulations of The Stock Exchange. Other securities llatad above era 
dealt in subject to the rules of FIMBRA. 

Gross Yield 

High Low Company Pries Change dhr.(p) % P/E 



Ass. Brit. Jnd. Ordinary 


— ■ 





Ass. Brit. Ind. CULS 







Armitaga and Rhodes 







BBB Design Group (USM) ... 







Bard or Group 


+ 1 





Bray Technologies . — 







CCL Group Ordinary 







CCL Group llpc Prof. ......... 







Carborundum Ordinary . — .... 







Carborundum 7.5pc Prof 


— • 





George Blair 


+ 1 





Is la Group 







Jackson Group 


+ 1 





James Bu dough 


+ 18 





Janies Burns ugh 9pc Prof ... 


+ 2 





Muldhouoe Nv (AmatSE) 


+ 18 




Record Rtdgway Ordinary ... 




— ■ 



Record Ridgway lOpc Prof. ... 







Rohan Jenkins - 








124eua — 





Torday and Carllale 

221 . 






Trevian Holdings .................. 






Unllock Holdings (SE) 







WeMai Alexander (SE) 

251 xd 

+ 1 





W. S. Yaaraa 







West York*. Ind. Hosp. (USM) 





GraaviHc &■ C ompan y limited GtaaviBa Davies Coleman T Jmin-ri 

6 LovarLane, London EC3R8BP _____ 27 Low Lane, London EG3RSDT 
Telephone 01-621 1212 FS3 Tdephone 01-62L 1212 

Member of FIMBRA bSj Member of die Stock Exchange 

Member of the Stock Exchange 

Goldstar Co., Ltd* 

(Incor p o rate d In iha Repifcft: d Korea wtft Bmfted fafaflfty) 


to the holders of die outstanding 
U.S. $30,000,000 

VA per cent. Convertible Bonds Due 2002 

Goldstar Co^ Ltd. 

(the "Bonds’ and the -Company" respectively) 

NOTICE IS HEREBY GIVEN ro the holders of the Bonds that the Company hai 
granted ro Holden of la Common Stock rights to subscribe for further shares of 
Common Stock of tire Cofaprar- Tire recimJ dare far such grant mu 24th August, 
1987 and such rights were exercisable on 10th and 11th September, 1987- 
Pursuant to the provision of tire Trust Deed constituting the Bonds, die 
Conversion Price pet share of Common Stock of the Company has been adjusted to 
reflect the above grant ftom - W49,700 nWZ.740 with effect from 15th August, 
1 987 (the day after the reconi due hr the above grant). 

18th September. 1987 

Goldstar Co^Lcd- 

Fliiascial Times Eriday September 18 1987 


Top official 
in plea for 

By Chris Sherwdl in Sydney 








27 & 28 October 

advertisement together with your 
business card, to: 

Financial Times 
Conference Organisation . 

2nd Floor, 

126 Jermyn Street 
London SW1Y4UJ 
telephone 01-925 2323 
telex 27347 FTCONFG 
Rax: as tel no. I 


CSWI International Finance N.V. 

(tin -Company *) 

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Dared; Sajmrmber 13, W? 

Anthony Robinson on a long-awaited report from the President s Council 

Pretoria advisers urge area reform 

AUSTRALIA’S most highly 
ranked Aboriginal official 
yesterday made an impas- 
sioned plea to the Govern- 
ment to commit itself within 
the next six months to reach- 
ing a treaty of understanding 
with the Aboriginal people* 
Mr Charles Perkins, the sec- 
retary of the Department of 
Aboriginal Affairs in Can- 
berra, insisted that a treaty 
was necessary and declared 
that the country's 200th an- 
niversary of white settle- 
ment was the right time to 
confront the issue. 

The outspoken Mr Perkins, 
who has been reprimanded 
more than once for expres- 
sing Us strongly-held views, 
made his remarks In an 
ad d ress to members of the 
foreign press. 

Bis comments came only 
two weeks after Mr Bob 
Hawke, the Prime Minister, 
unexpectedly floated the idea 
of a treaty or compact with 
the Aboriginal people, per- 
haps as a preamble to legis- 
lation setting up an 
Aboriginal Affairs Com- 

The idea immediately gener- 
ated controversy over what 
exactly be meant and whether 
it would meet Aboriginal de- 
mands. Mr Hawke himself 
warned Aborigines not to 
have “ unreal expectations" 
about it, while the opposition 
Liberal Party called it 
“ tokenism." 

In his remarks yesterday 
Mr Perkins said a treaty 
should be embedded in the 
constitution by referendum 
and should embrace the con- 
troversial issues of prior 
ownership of Australian land, 
of land rights and of com- 
pensation for land loss. 

Acknowledging that conclu- 
sion of a pact would take two 
to three years, he insisted 
that a commitment had to be 
made within the next six 
months so that “ we can all 
celebrate Australia's bicen- 

A treaty, he said, would 
“help ns consider the past 
in a more reasonable manner 
and allow us to leave a legacy 
for our children." 

It would "allow ns to de- 
velop a new relationship 
between each other," Mr Per- 
kins said. 

"At the present time there’s 
no dignity In the relationship 
between whites and blacks in 
this country, there's no re- 
spect, there’s no appreciation 
and there’s no understanding. 

But a treaty was still only 
"part of a mosaic which is 
the answer” to Aboriginal 
affairs. It would take com- 
passion, sensitivity, under- 
standing, a will, programmes 
and projects, administration 
and hard work, and 
give aud take to "change the 
situation from bad to reason- | 
able." I 

SOUTH AFRICA’S top-level 
policy advisory body, the 
President's Council, yesterday 
proposed greater flexibility in 
the Group Areas Act on 
segregated residential areas. 

It also proposed abolition of 
the Separate Amenities Act 
which guards the remnants of 
"petty apartheid" in public 
places and public transport 

In a long-awaited report pre- 
sented to parliament yesterday 
the committee, which has spent 
more than two years reviewing 
the remaining apartheid laws, 
stopped short of recommending 
scrapping the Group Areas Act 
as urged by Influential lobbies 
such as the Urban Foundation 
and black groups. 

Instead it proposed the 
retention of legal protection 
for existing racially-segregated 
residential areas coupled with 
a degree of local option which 
would permit residents them- 
selves to decide the ethnic com- 
position of their area. 

Bowing to the reality of 
mixed residential areas In many 
city centres it also proposed 
legal recognition for de facto 
"open" or racially-mixed "grey 
areas” and freedom of choice 
in some new developments. 

The report is understood to 
be less radical then the com- 
mittee's original proposals made 
nine months ago. These were 
rejected before publication by 
President P. W. Botha person- 
ally because of fears that aboli- 
tion of the principle of legally 
enforceable ethnic group areas 
would lead to a massive white 
backlash In die wbites-only 
general election in May. 

Doubts over the government’s 
commitment to the Group Areas 
Act remained an Important 
factor behind the 30 per cent 
vote that went to right-wing 
parties which continue to 
oppose changes to the act 

Mindfhl of the extent both 
of white apprehension of 
change and black, especially 
Coloured and Indian, anger at 
the discriminatory aspects of 
existing laws the latest propo- 
sals seek to steer a middle way 
between white fears and black 
aspirations, the poles of South 
African politics. 

While insisting on statutory 
protection for "group" resi- 
dential areas the report pro- 
posed that "free market prin- 
ciples" should be applied in 
and around business and 
industrial areas following the 
recent opening up of central 
business districts to all race 
groups for business only. 

By Andrew Whitley In Kuwait 

KUWAIT has taken advantage 
of the protection being afforded 
to its tankers, by three foreign 
navies — those of the US, the 
UK and the Soviet Union— to 
increase its oil production to 
more than double its official 
Opec quota of 996,000 barrels 
a day. 

Western diplomats say -that 
since the US reflagging and 
naval escort began in the second 
half of July output bas soared 
to over 2m b/d, a level unseen 
since early 1980. la late August 
it Is said to have reached a 
peak of 2.2m b/d. 

By comparison, according to 
the National Bank of Kuwait, 1 
in the first five months of the | 
year Kuwait’s oilfields were 
pumping crude at an average 
rate of only 1.25m b/d, 14 per 
cent down on the same period 
in 1988 and a modest 26 per 
cent above the country’s desig- 
nated quota. 

Taken together with the re- 
cent increase in oQ prices of 
about 92 , to near the $20 a bar- 
rel mark, this production surge 
means that at the moment 
Kuwait could be enjoying a 
windfall gain of an extra 960m 
a month in its all-important oil 

Iran has been attacked by 
Iraq as well as in the West, for 
profiting during July and 
August from the temporary lull 
in the Gulf "tanker war" by 
substantially boosting its oil 
exports. But it now appears that 
Kuwait has acted even more 
decisively to boost its revenues. 

Official statements insist j 
piously that Kuwait, usually ! 
Opec’s fifth largest producer, j 
continues to adhere to its quota 
limit. To back up this claim — 
and dampen rife speculation 
over the extent of its overpro- 
duction — the Government 1 
announced earlier this month 
that spot market sales had been 

However, if the latest pro- i 
duction estimates are correct, ; 
the country's limited storage 
capacity, equivalent to six 
days' output at the 2m barrel 
level, indicates that most of the 1 
additional output is probably 
finding buyers. ! 

Diplomats commented that j 
in pushing production so hard 
Kuwait’s motives seem to be a 
mixture of responding to 
market conditions and a fear 
that the outlook in the Golf 
could deteriorate in toe coming 

"The question is whether the 
August figures were a flash in 
the pan, or are being main- 
tained in September," said one 
close observer of the local oil 

Black bid for 
S African 
bus concern 

f. " 

desegregated reality of a Johannesburg ianer-cBy area 

In practice many inner-city 
areas, such as Hlllbrow in 
Johannesburg and Woodstock 
in Cape Town, are already 
mixed areas with all races 
living in areas zoned for whites 

Legalising mfnwj or "open " 
areas would not only reduce 
exploitation by frontmen and 
landlords who often insist on 
premium payments for illegal 
tenants, out allow while resi- 
dents the opportunity legally to 
sell their properties to black 
people ana move from the 

The report says itst "point 
of departure is that besides 
own (separate) residential 
areas, provision should in 
principle be made for free 
occupation of open areas where 
circumstances warrant tins . . . 
In this way group rights and 
individual rights could be 
treated in a more balanced way 
and provision would be made 
for the forces and process that 
operate in the urban context” 

The report is In line with the 
government’s stated commit- 
ment to a more open and 
flexible society. This is backed 
up by the abolition of "influx 
control " and the pass laws, 
recognition of freehold pro- 
perty rights for blacks in town- 
ships and acceptance of large- 
scale "orderly urbanisation” by 
blade people as a positive 
development and engine of 
faster economic growth rather 

than a nightmare to be pre- 
vented. . 

The report also examines 
the consequences of legalising 
“open" or “grey areas"— 
especially in the areas of poli- 
tical representation and educa- 
tion. Total abolition of the 
Group Areas Act would in 
practice have spelt the end of 
social apartheid or separate 
development— a move desired 
by many at home and abr oad 
but resisted by a majority of 
white people, specially those 
of lower and middle income 
who most fear what they 
would consider collapsing pro- 
perty and other values if 
racial restrictions were 

•paring zoning means that 
all schools, hospitals and other 
facilities serve only the zed- 
dent race group. Political 
representation is also ethnic 

from local and provincial 

level up to the three ethnic- 
ally-segregated houses of par- 
liament Legalising "open " 
areas however implies accept- 
ance of both mixed schooling 
and mixed voting In limited 
areas of the country. 

The report fudged the educa- 
tion issue with the suggestion 
that children could go to pri- 
vate schools which, unlike the 
state schools, are already 
racially mixed. 

On the voting question the 
committee set down five alter- 

native proposals ranging from 
a joint voters roll with, no 
restriction on choice of candi- 
date through to a separate 
elected "area committee" with- 
in an exis t in g ethnic local 
authority, to the forfeiture of 
voting rights for - those who 
settle in an area zoned for an- 
other population group. 

The committee stopped short 
of making a specific recommen- 
dation but said it could find no 
justification, for denying citi- 
zens and ratepayers full parti- 
cipation in their local authority 
and recommended a “reform 
approach" to the question. 

The report; which is to be 
debated in parliament, was 
signed by representatives of 
the ruling. National Party on 
the President’s Council commit- 
tee hut rejected by those of the 
right-wing official opposition 
Conservative Party, the 
moderate Progressive Federal 
Party and the coloured Labour 

One of the key questions now 
is whether the flexibility pro- 
posed will permit the rebuild- 
ing of places such as Ditfrict 
Six — not as a coloured ghetto 
as before but as a new open 
area for all races. 

It is a proposal strongly sup- 
ported by pro-reform business 
circles and whose acceptance by 
the government would be one 
of the most convincing proofs 
of its commitment to a more 
equitable future. 

By Our Johannesburg 


INTERNAL divisions . within 
toe black South African bus 
and taxi association (Sabta) has 
led to the collapse of its bid to 
buy the 52 per cent controlling 
stake in the Putco Bos Com- 
pany from its Italian owners, 
the Carleo family. 

The bid by the association, 
representing more than, 45.000 
black taxi and mini-cab drivers, 
to buy for about R150m Putco’s 
: buses and repair shops was seen 
as a potential breakthrough for 
black enterprise. 

Putco transports millions of 
blade commuters around the 
townships and between the 
townships and jobs in white 

It has been a big loser from 
the rapid growth of private 
black taxi companies which 
provide quicker, safer and more 
flerihle transport for those able 
to pay a premium over the bus 

Despite the collapse of the 
Sabta bid, however, negotia- 
tions continued yesterday for 
the sale of stock exchange- 
listed Putco to nominees repre- 
senting both black and white 
business Interests. 

The negotiations are being 
led by Mr Ivan Brownlees, who 
acted as a nominee for Sabta 
in earlier negotiations but has 
become toe principal in the 
latest round. 

In ‘grave crisis’ 

THE WAR in Mozambique 
has created a crisis which 
" continues on a massive 
scale” affecting mere than 
four million people, the 
British charity Oxfom warned 

Hr Frank Judd, the 
director of Oxfam who has 
been visiting Mozambique, 
Bald at a London press con- 
ference that international aid 
had helped avert a major 
disaster, toot added: "Western 
governments, in particular 
the British government, must 
also tackle the main root 
cause of Mozambique’s prob- 
lems by potting effective 
pressure on South Africa to 
stop its continuing support 
for the Mozambique National 

Kuwait used 
protection to 
increase oil 

Truce unlikely to end conflict over Aouzou 


Muammer Gaddafi, the Libyan 
leader, that his country’s long 
war with Chad Is "over” is 
unlikely to bring toe long con- 
flict over toe Aouzou strip to 
an end. in the opinion of 
diplomatic observers. 

Rather it reflects exhaustion 
on the part of Libya following 
a series of stunning military re- 
versals this year which have 
cost the country about 9,000 
troops killed, probably more 
than a tenth of toe total 
strength of its armed forces. 

In a speech reported yester- 
day by the official Jana news 
agency In Tripoli, Col Gaddafi 
pledged never again to inter- 
fere in Chad's internal affairs 

if As southern neighbour re- 
nounced its claim to the Aouzou 
strip, a bleak desert area of 
about 44 ,000 square mites 
annexed to Libya in 1973. 

Last week toe two countries 
agreed to a truce but there is 
little possibility of a peaceful 
settlement over toe disputed 
territory because of toe signifi- 
cance which both countries 
attach to toe area. It is gener- 
ally, hut perhaps erroneously, 
believed to be rich in minerals. 

Having gained control over 
part of it after dearly striking 
a heavy blow to Libyan morale 
President Htesene Habra will 
dearly not accept Col GatklafFs 
claim to toe Aouzou Strip. 

The US, which has given his 

regime more than ,.93Qm in 
acknowledged military aid; want 
to see him give up the straggle 
against one of the Administra- 
tion’s leading betas noires 
although France, N'Djemena’s 
main backer in toe part, would 
like to see an agreed resolution 
to the conflict and a compromise 
over Aouzou which it, as a 
colonial power, once ceded to 
Italy when it was master of 

•The war between toe great 
Jamahiriya (Libya) and Chad 
is over after the expulsion of 
the mercenaries from Aouzou 
and their annihilation in 
as-Sarra," Jana quoted Col 
Gaddafi as saying. 

Col Gaddafi apparently hopes 

that recovery of, the greater 
part of the strip may lead to 
recognition of his country's 
right to It 

Libya recaptured the fly- 
blown town of Aouzou on 
August 28 but subsequently 
suffered a humiliating setback 
when a Chadian column pene- 
trated 60 miles into recognised 
Libyan territory. 

NDjemena’s claim to have 
killed 1,713 Libyan troops and 
destroyed 26 aircraft and 70 
tanks at the Maaten as-Sarra 
base from which bombing raids 
were mounted against it have 
been confirmed as substantially 
correct by Western intelligence 
informants. Chad said that it 
had lost 60 men. 

Tony Walker on prospects for an economy dependent on Gulf stability 

Jordan forced into rare austerity 

deputy governor of Jordan's 
central bank remembers the day 
in toe 1970s when as a rela- 
tively junior officer, he pro- 
cessed a telex transfer of aid 
fund from Saudi Arabia of 

The sum caught the young 
Dr Hukri by surprise because 
he was expecting 914m. Twice 
he queried the amount, suggest- 
ing that an additional "O" may 
have been added. No, came 
the reply, the transfer was 

A year later Saudi account- 
ing practices eventually caught 
up with toe error, but by that 
frimp the money had been spent. 
Dr Shukri recalls with a laugh. 
In these days of lower oil prices 
and swelling budget deficits it 
is unlikely Saudi Arabia or 
other wealthy Gulf benefactors 
would make such mistake, let 
alone fail to rectify 4t for such 
a long time. 

And therein lies, In part one 
of toe reasons for the cash 
squeeze Jordan is experiencing 
at the moment. A shortfall in 
funds pledged by Gulf donors 
nnder a 1978 Baghdad Arab 
League summit formula and a 
slowdown in remittances from 
Jordanian nationals working in 
the Gulf is causing difficulties. 

The latest central bank statis- 
tical bulletin reports that at toe 
end of April, cash reserves 
stood at 51.8m Jordanian dinars 
(£90m) or sufficient funds to 
cover just two weeks' imports. 
Dr Shukri says the position has 
improved since April and that 
reserves reached more than 70m 
dinars at the end of July. 

However, the pattern of the 
past several years is one of 
diminishing reserves to the 
point where some might re- 
gard Jordan's financial position 
as precarious. Offsetting this are 
Jordan's gold reserves worth 
about 9500m at today's prices 
and a large credit to Iraq of 
about 9800m which shows up 

under a column in toe central 
bank statistics entitled "other 
foreign assets." 

Dr Shukri describes this sum 
qs "technically usuable* to 
cover some categories of im- 
ports such as olL However, toe 
fact is that Jordan whose eco- 
nomy is 70 per cent reliant on 
imports is being forced Into a 
programme of unaccustomed 
austerity and prospects are for 
even more difficult times ahead 
until oil prices rebound and 
Gulf states regain their econo- 
mic equilibrium. 

Mr Zeid al Rlfai, Jordan's 
Prime Minister, insists that the 
economy is in “ very sound 
shape.” He noted Jordan in 
1986 repaid 9580m in interest 
and principle on its approxi- 
mately 94bn foreign debt as an 
indication of his country's 
sound financial position. 

Jordan's debt service ratio 
(debt repayments as a percen- 
tage of earnings from exports, 
workers' remittances and other 
se r vi ces) is creeping up from 
9.9 per cent in 1985 to about 
13 per cent this year. Mr 
Rifai recently told parliament 
that a debt service ratio of 20 
per cent was a “red line” 
beyond which it would be Im- 
prudent to venture. 

Both Dr Shukri and Mr Rifai 
said in interviews it would be 
necessary for Jordan again this 
year to borrow abroad. Last 
year it raised 9150m inter- 
nationally. That money was not 
drawn down until early 1987. 

Jordan is also grappling with 
persistent budget deficits. A 
projected deficit for 1987 of 
39.6m dinars is considerably 
understated. On present indica- 
tions Jordan’s domestic deficit 
this year Is likely to be at least 
four times that figure. 

Mr Rifai recently asked par- 
liament to approve a supplemen- 
tary budget of 141.4m dinars, 
mostly to cover debts accrued 
by Jordan's armed forces and 

left unpaid for a number of 

Growing budgetary pressures 
are likely to be a feature of 
the medium term for a country 
heavily dependent on subven- 
tions from Gulf states which 
have proved _ highly unreliable 
benefactors in recent years. 

Only Saadi Arabia is con- 
sistently fulfilling its pledge 
under toe Baghdad agreement 
which allocated Jordan 9L2m 
annually in Arab aid in recogni- 
tion of its frontline status 
(facing Israel). The Saudis pro- 
vide $357 m annually in three 

Jordan is also experiencing a 
reduction in the inflow of 
remittances from the 330,000 of 
its citizens working abroad, the 
majority of them in toe Gull 
Officially recorded transfers 
from this source amount to 
about Slbn annually. Dr 
Shukri said there had been a 
drop in remittances of about 8 
per cent In toe first half of thin 

Jordan’s weakening foreign 
exchange position, its heavy 
dependence on Imports for up 
to 70 per cent of. its require- 
and its budgetary 
difficulties has revived dis- 
cussion about a possible 
devaluation of what some 
obeservers regard as an over- 
valued dinar as a means of 
further curbing imports. 

But Jordanian officials are 
adamant such a move is not 
being contemplated. Dr Shukri 
insisted that the local exchange 
rate accurately reflects the 
dinar’s value on a trade- 
weighted basis against the 
currencies of Jordan's major 
“^d'ng partners. 

He also argued that a 
devaluation would be a retro- 
grade step because of Jordan’s 
dependence on imports. It 
would encourage inflation 
(Jordan actually experienced 
°®5®tion of 1.2 per cent in toe 
urat four months of this year) 

and was likely to provoke a 
bout of capital flight 

Still. _ the fact that the 
possibility of a devaluation is 
being canvassed in business, 
government and banking circles 
in Jordan is significant The 
subject was virtually taboo until 
recently. As a foreign observer 
said: “ At least they won't take 
you out end shoot you now. if 
you suggest it” 

Jordan has been doing its 
best to reduce the domestic 
deficit and to improve its 
balance of payments position. 
It has reduced expenditures 
where possible, strengthened 
tax collection, imposed addi- 
tional duties on imports and 
sought to encourage exports. 

However, as Mr Rifai ob- 
served, the government in its 
efforts to restrain imports is 
caught in something of a 
vicious circle because customs 
duties are a principal source 
of revalue. He said scope for 
further expenditure cuts and 
reductions in imports was 
limited. Commercial activity is 
already depressed. 

Jordan is straggling to main- 
£“ «■ traditional exports of 

wSSf* 1 * *3- taxfctoffs in 
markets. The value of exports 

ST*-* dropped 

g^l986 compared with the year 

iunStoh2r^5 f* 1 "* to reduce 
helped it to narrow its 

££? Ir 6 ” 1 “ 1988 by 224m- 
dinars Which, neverthe- 
rapre^nted more than one- 
JgJ™ Gr °ss Domestic Pro- 

Another Jordanian concern is 
““employment in par- 
among professionals 
HSJ" *««■ and engineers. 
Joblessness among these groups 
^ '“Cbed 20-30 per cent. 

Official statistics put toe 
aboutA ^.employment rate at 
2SS Sj* ce «- but this almost 
underestimates the 

. . r • e ■ 

, 1 % 



ii dec 

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u. M\.4\ 

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-financial Times Friday September 18 1937. 


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*i>-£ \ 

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d awn i ^ 
'. idc«: “faj- 

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= : *§c 

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• v. »£ 
- -’ •• - :-=33’ 


Australian Consortium wins Turkish power plant franchise 


The "Oral Model" — an 
ambitions ache me for energy 
and infrastructural projects 
in developing countries— took 
a major step towards becom- 
a reality yesterday with 
the announcement by Tur- 
key’s Prime Minister that the 
government is to go 
with plans for three large 
coal-fired power plants boUt 
under franchise. 

Hu announcement is likely 
to have far-reaching conse- 
quences hath for the power 
Industry in the developing 
world, where the model 
creates an important prece- 
dent, but also for the inter- 
national coal trade in Europe 
and the Middle East. Turkey 
has decided to award the first 
contract to an Australian con- 
sortium which intends to 

create a large stockpile of 
Queensland coal beside the 
plant for re-export 
Mr Oral said that the govern- 
ment would shortly begin 
talks with the Australian con- 
sortium, headed by Seapac of 
Queensland and also includ- 
ing Chiyoda and Tokyo Elec- 
tric of Japan, Westinghouse 
of the USA, and the Queens- 
land State Government The 

plant will be at Yomurtalik 
on the Mediterranean coast 
and will produce MMMW of 
electricity a year, it Is ex- 
pected to take three and a 
half years to build and cost 
around $1 ,200m. 

Final negotiations are not 
expected to present any major 
hurdles, but a signing of a 
contract will probably have to 
wait until after the Turkish 

general elections on Novem- 
ber 1. 

As soon as as the first con- 
tract is signed, Turkey will 
move on to the second pro- 
ject, a 960 MW plant at Teidr- 
dag near Istanbul. This is to 
be built by Bechtel of the US, 
with KWV of West Germany 
and Combustion Engineering 
of the US, and will cost 
around $ 1,000m. 

The government hopes that 
a contract for it will be com- 
pleted by the late spring of 
next year. This would open 
the way for negotiations on 
the final plant, to be built 
by the Electrical Power Cor- 
poration (EPDC) of Japan, 
with Mitsubishi and Hitachi. 
It will be at Aliaga on the 
Aegean coast and produce 
around 1,000 MW. 

The Bechtel and EPDC 
plants will be nm as joint 
ventures with the Turkish 
Electrical Authority, TEK, 
for 15 years. After which 
they will be handed over to 
the Turkish government. The 
Australian project has a 
longer life and will not be 
banded back for 26 years, 
dose to the economic life of 
the station. 

David Barchard in Ankara on the ‘Build-Own-Operate’ method for projects which clinched a contract with Australia 

Energy deal a triumph for Ozal’s novel financin g model 

tHEH E WAS a sense in Ankara 
yesterday that something rather 
unusual in international trade 
terms had been achieved with 
the announcement of the deci- 
sion to go ahead with three 
giant coal-fired power plants on 
the Turkish coast. 

Both the Turkish Government 
and the five rival consortiums 
which had been negotiating the 
projects for two and a-half 
years have made the utmost 
concessions to clinch a deal 

For the Turks, the deal 
means that a new source of 
project financing, very close to 
direct foreign investment, has 
become available for big infra- 
structural deals. It is some- 
thing of a personal triumph for 
the Prime Minister, Mr Turgut 
Oral, who three years ago 

announced to a sceptical world 
that he had come up with an 
alternative to traditional pro- 
ject finance. 

Bard negotiations have since 
smoothed away the uncertain- 
ties and objections voiced by 
foreign banks, companies and, 
above all, export credit agen- 

- Turkey wants the model not 
cxtiy because It enables it to 
go ahead with projects tor 
which it might not be able to 
borrow money. The background 
to the power plant schemes is 
an expected annual increase of 
12 per cent in demand for elec- 
tricity over the next five to 10 

The model will also give the 
Turks access to foreign man- 
agement and technical assist- 
ance in the day-to-day running 

trade declines 


THE SOVIET UNION has fallen 
to second place in trade with) 
Finland for the first time since 
the mid 1970s. The drop in- 
Soviet-Finnish trade last year. 

West Germany is now ex- 
pected to become Finland"? 
main trade partner, followed by 
the Soviet Union, Sweden and 
the UK. , 

Soviet-Finnish trade troubles) 
began when the world oil price- 
fell below $20 a barrel. Last 
year the percentage share of 
the Soviet Union in Finland’s 
trade fell to roughly 18 per cent 
from a former high of over 20 
per cent in the early 1980s. 

According to the Finnish ' 
Finance Ministry, trade with the 
Soviet Union is expected to fall 
by 10 per cent in volume terms 
this year over last year. A fur- 
ther 10 per cent drop. is ex- 
pected in 1988, with a similar 
decline projected tor 1989. In. 1 
1981. twoway trade readied a 
peak of $6Blm and has declined 
gradually since. The National. 
Bank of Finland recorded Fin- 
land’s imports from toe Soviet 
Union for toe Janoary-July 1987 
period at FM 6JB8bn and ex- 
ports at FM 7.75hn. The balance 
of trade has usually been in Fin- 
land's favour. 

Finland’s trade with the 
Soviet Union is conducted 
through a clearing account sys- 
tem. The USSR ended 1988 with 

la large deficit. Under the 
Terms of the clearing system, 
this deficit needed to be erased. 

The result was the opening 
of a special account — similar to 
a low interest short term credit 
-^totaHing about 300m roubles 
($477m). The first payment on 
this account, which was formally 
arranged in February this year, 
is due in 1989 with final pay- 
ment in 1991. 

‘ Trade with the Soviet Union 
M' highly dependent on oil 
prices. When the world price 
.of oil dropped, the Soviets 
'found themselves strapped for 
hard currency. As a result 
trade with Finland suffered. 

Both the finance Ministry 
jmd the National Bank of Fin- 
land agree that trade with the 
Soviet Union is declining and 
will continue to decline unless 
one of two events occur. 

Either the world oil price 
rises to over '$20 a barrel and 
remains there, or Soviet leader 
Mikhail Gorbachev’s restructur- 
ing of the Soviet economy 
changes significantly the ability 
of the USSR to sell large 
quantities of - industrial and 
consumer goods to Finland. At 
present it relies upon oil, and 
oil-related, export products. 

The Soviet Union is expected 
to end the year with another 
deficit in Finnish trade, prob- 
ably of around 9200m. 

European anger at 
US textile restraints 

THE EC will be forced to take 
action against US . products if 
Washington passes legislation 
to curb imports of textiles, 
clothing and shows, the Euro- 
pean Commission warned 
yesterday, William Dawkins 
reports fr o m Brussels. 

In the Far East, Asian 
exporters reacted angrily, say- 
ing that such a move could 
invfte retaliatory measures 
from its trading, partners. 

Mr Willy de Clercq, the EC’s 

Commissioner for external 
trade, said there could be "no 
justification ” for such a move. 
He was responding to the vote 
a day earlier by the US House 
of Representatives in favour of 
a bill to limit to one per cent 
the annual increase in US 
textile and clothing imports and 
to freeze foreign shoe sales at 
current levels. u The whole 
international trading system 
will bear the costs,” said Mr 
de Clercq. 

Travelling on 

Enjoy reading your complimentary 
copy of the Financial Times when 
you’re staying . . . 

. . .in Milano at the 

Diana Majestic, Duca di Milano, Hotel 
Excellsior Gallia, Hilton Hotel, Hotel 
Michelangelo, Hotel Palace, Hotel 
Principe di Savoia 

of the plants once they are con- 
structed. It is hoped that some 
of the less-happy episodes in 
Turkey’s recent industrial his- 
tory, notably the delays and 
confusions of a giant lignite- 
fired power plant at Afsin Elbi- 
stan, built with traditional 
project finance, will be avoided. 

The Turks also hope that the 
new models will prove that 
Turkey is a safe environment 
for the foreign investor in the 
medinm-to-long term, and that 
an inflow of other investments 
will follow. 

The Australian hopes sur- 
rounding the project are no less 
high. The Yumurtalik plant, 
which will be a deep sea port, 
will consume 3m tonnes of 
Queensland coal, supplied at an 
expected $35 per tonne cif. but 

the port will take delievery of 
an initial 10m tonnes a year. 
The balance will be re-exported 
to Europe and the Middle East. 

The port is designed to be ex- 
panded to at least three times 
its initial size in two subsequent 
enlargements. An Australian 
source in Ankara yesterday 
said: “ We should be able to 
supply Queensland coal to West 
Germany at about half the cost 
of German coaL” 

The Australians assume that 
the deal will in tits initial stages 
give them a virtual monopoly of 
the rapidly growing Turkish 
coal import market because of 
their ability to undercut all 
other International suppliers. 

The Australians have also 
dangled before the Turks the 
possibility that the vessels 
carrying the coal to Yumurtalik 

able to take cargoes 
back to the Far East. 

These include not only such 
Turkish bulk exports as 
minerals, but also crude oil. 
The new deep sea port will be 
only a few miles from the 
Mediterranean terminal of the 
two Turkish-Iraqi crude oil 

It appears to have been these 
considerations which persuaded 
the prime minister to resist 
powerful lobbying from the US 
(at least one senior administra- 
tion official is said to have rung 
him up to press Bechtel’s 
claims) on behalf of the other 

He said yesterday that the 
deal was not the first time that 
the ’’ Oral Model ” (also known 
as “ Build-own-Operate ’’) had 
been used and that the govern- 

ment had negotiated nine agree- 
ments for hydroelectricity 
plants on the same tines. These 
appear to he mostly small deals 
with local companies, however. 

The second and third con- 
tracts wil probably be signed in 
May and November of next year, 
if everything goes according to 
plan. However Turkish contracts 
have a way of being delayed 
again and again. It is under- 
stood however that the letters 
of intent which the Turkish 
Government was yesterday pre- 
paring to send to each con- 
sortium will have a stated time 

For the time being however, 
the future of all three deals 
will depend on the outcome of 
the general election on Novem- 
ber I- Turkey's three main 
opposition parties have signalled 

that they do not like the Oral 
model. While they would not 
scrap an existing arrangement 
If elected, they would probably 
Oat go through with an incom- 
plete deaL 

A hostile government is just 
one of a series of possible 
hazards which the ventures 
could face during their 15-to-26- 
year life spans. These have 
been the subject of detailed 1 
contingency plans largely 
drawn up as a result of negotia- 
tions with the US Eximbank. 

Turkey has firmly resisted aU 
attempts to make it give a 
sovereign guarantee for the 
projects. It wants them to be 
credit rather than debit items 
on its balance of payments, 
which they would not be if it 
issued a sovereign guarantee. 

cable sale 
to Soviets 

CEE GENERALE d’Electricite 
CGEPFA (CGE) said its Sub- 
marcom underwater cable sub- 
sidiary had signed a Fr2l6m 
contract with the Soviet central 
buying office Masbpriborizn- 
porg, Reuter reports from 

The contract is for 392 km of 
reinforced coaxial cable and 
includes 40 underwater 
repeaters and terminal equip- 
ment, CGE said in a statement. 

The cable would be laid by 
a French ship, but the contract 
included training in France of 
Soviet personnel. Deliveiy is 
due in July 1988 and the con- 
tract would be paid for in 
European Currency Units, the 
statement said. 


The Financial Times Is 
proposing to publish this 
Survey on 


SEPTEMBER 25 1987 
For full details, contact : 
on 0272 292565 



‘ neliepe it or not, but whatyotdre looking at in this picture represents an investment of 
Jj£10 million. 

That’s how much Peaudouce are spending to set up a factory thaPU make the product 
you can see being modelled below. 

As for the site for this, their first ever British ?nanufactunng unit, we’re proud to say that 
with the whole country to choose from they eventually decided to build in Telford. Incidentally, 
once in full swing, the factory’s set to produce more nappies than any other in the UJC. 

So what made the worlds third hugest producer of a baby hygiene products 0 plump for 
the Shropshire town ? 

To understand their choice one must first consider the nappy. As a product, its value as 
compared to its bulk is low. Also, by its very nature, it’s a high volume product. 







Wfd\ MANa£STE Mfr£"3 Combine these factors and you can see wiry, in the nappy 

world, regular, reliable and economical transport is aU important. 
’THKMoV* 5 ! JSitl Telford, thanks to the M54 , and its location dose to the 

\ b&trt of Britain’s motorway network, admirably meets till these 

j criteria. In fact, two thirds of the entire British consumer market 
Jus V 7 / can be reached from Telford by HGV in under four hours. 

V to The French were also impressed wid) how easy it is to get people 

• loiSonj^ to and from the town. Birmingham International Airport is 
__ n forty minute drive away, while fust over two hours on a 

tram will get you to the heart of London. 

As the new factory is set to create 235 jobs, the ready availability of a skilled, adaptable 
workforce was smother key consideration. Needless to say that in Telford Peaudouce found 
all the people they needed. Moreover, in the Telford Development Corporation they found 
the people who could make the whole project go as smooth as, dare we say it, a babfs bottom. 

Telford Devdopment Corporation not only offered advice and assistance at every stage 
of the planning process, but also made sure that the red tape was kept to a minimum . 

Add all this to the fact that Telford is set amongst some of Britain’s most 
beautiful countryside and you’ll begin to understand why the town came top of the French 
multinationals list. 

So you’re thinking about relocating your business perhaps this babfs bottom is fast the 
pointer yotdve been looking for . : 

But before you read the rest of the paper we’d tike to leave you with one fatal thought . 

With £10 million at stake, you can rest assured that when Peaudouce finally chose 
Tdford as the site of their new nappy factory, it wasn’t a rash decision. 

To find out more ring Chris Mackrdl, C omm e rc ial Director on 0952 613131. 


success story continues. 

Financial Times Friday September 18 1987 



The Saatchis’ search 
for serious money 

Christopher Lorenz assesses the ubiquitous brothers’ latest 
ambition - to add financial services to their empire 

VISIONARIES, megalomaniacs, 
or just plain opportunists? That 
is what the business, financial 
and investment communities on 
both sides of the Atlantic have 
been asking with growing per- 
plexity this week about the 
amazing brothers SaatcbL 

There is certainly plenty to be 
puzzled about. The head- 
scratching started on Sunday 
with the remarkable news that 
Maurice Saatchi. chairman of 
the world's most voraciously ex- 
panding advertising, marketing 
services and management con- 
sultancy combine, bad just pro- 
posed marriage to Britain's 
troubled Midland Bank, which 
is roughly double its size. 

Not surprisingly. Midland re- 
jected the idea out of hand. 

There the episode might have 
rested, either as a wayward 
piece of Maurice and Charles 
Saatchi's opportunism at the 
prospect of an ultra-cheap ac- 
quisition, or as the first hint of a 
plan to emulate Italy's Carlo de 
Benedetti, and other European 
buccaneers, in the construction 
of a disparate collection of busi- 
ness empires based round a 
number of entirely separate 
cores; in de Benedetti's case, 
these include electronics, me- 
dia, food and vehicle compo- 

But not a bit of iL Instead, 
Saatchi & Saatchi reacted to 
Midland’s rebuff by declaring 
its belief that financial services 
were ’a very natural extension 
of the business service sectors 
we are already in/ 

On Monday, Saatchi's shares 
rose slightly. But the next day 
they plunged in disbelief when 
it emerged that the company 
was not only engaged in take- 
over talks with one or more of 
the world's leading accountancy 
firms, but was also in negotia- 
tion with a broad raft of British 
financial services organisa- 
tions, notably merchant banks. 

Inquiries to the Saatchi camp 
(the company almost never talks 
'on the record*) elicited its con- 
fident expectation that at least 
one such deal would be signed 
within mouths. Rumours in- 
stantly started coursing around 
the Cily, with merchant banks 
Bill Samuel and Morgan Gren- 
fell two of the most popular tips. ' 

Yesterday Hill Samuel con- 
firmed that Saatchi bad made a 
firm approach, which it had re- 

Far from being merely an op- 
portunistic strike, in other 
words, the talks with Midland 
were clearly just part of a much 
broader foray by Saatchi into fi- 
nancial services, on a platform 
of supposed Industrial logic*: 
of synergy between the hitherto 
separate and very different 
worlds of business and finan- 
cial services. 

The Saatchi plan was - and 
very definitely still Is - to bridge 
the two, and repeat in financial 
services its achievement in ad- 
vertising of moving from no- 

Far from being an 
opportunistic strike 
the talks were part 
of a broader foray 

where to become the world's 
number one in barely IS years. 
(It harbours similar global am- 
bitions fbr all the other busi- 
ness services it has gobbled up 
through acquisition in the past- 
few years.) 

The place that Midland - or 
any other clearing bank - was 
intended to occupy in Saatchi's 
scheme of things is still un- 
clear; initial guidance from the 
company on Monday night was 
the logical argument that, since 
the main thrust of the new strat- 
egy would be into corporate fi- 
nancial services, any link with a 
'clearer* was not top of the pri- 
ority list Hours later, however, 
a different Saatchi source con- 
tradicted this logical position. 

Tuesday’s incredulous reac- 
tion from many city analysts, 
management consultants and 
others was therefore under- 
standable. Much of their lan- 
guage was unprintable. But one 
consultant with years of experi- 
ence wi thin International ser- 
vice organisations condemned 
the move on Midland as part of 
'a Chinese money gamer, and 
the wider Saatchi strategy to- 
wards financial services *as 
having nothing logically to do 
with the building of a service 


Whatever the investment and 
share price logic might be, the 
strategy had "no meaningful 
synergy from a business point of 
view*, agreed Neil Blackley, se- 
nior marketing services analyst 
at James CapeL 

At a time when successful 
global service organisations 
such as American Express have 
been turning their backs on the 
concept of "financial supermar- 
kets*, Saatchi is effectively do- 
ing the opposite. 

In reality, the strategy is a 
good deal more thought-through 
than that Nor is it a complete 
bolt from the blue. For one 
thing, Saatchi is thought to have 
made an approach several 
years ago fbr Phillips & Drew, 
its own broker, which has since 
been bought by Union Bank of 

Furthermore, the Saatchi 
camp feels that by no means all 
the financial institutions it is 
talking to are as dismissive as 
the Midland of its notion of the 
gradual breakdown of barriers 
between financial and business 
services, and the construction 
of a "multi-service business* 
with the resources and global 
spread capable of confronting, 
especially, the Japanese threat 
in financial services - a danger 
of which Saatchi has been mak- 
ing much this week. 

The Saatchi logic, as ex- 
pressed in a special study 
which has been shown to these 
and other institutions, is cer- 
tainly complicated. It rests on 
several key components: 

1. The power of a global strat- 
egy. This has become a famili ar 
scene in mawnfagtairinfl tlrnnlm 
to the worldwide success of the 
Japanese; it is not only Saatchi 
which has spotted that the same 
phenomenon is now becoming 
increasingly evident in many 
service sectors - especially fi- 

2. The ' organisational and 
competitive power of scale, es- 
pecially in terms of capital re- 
sources, superior market intel- 
ligence, information systems, 
and career opportunities for 

3. Hie transferability of man- 
agement skills from one area of 
knowhow-intensive services 

(such as advertising or manage- 
ment consultancy) into another 
(such as financial services'). 

4. Saatchi's own particular ex- 
perience of managing a network 
of service businesses which is 
unusually widely spread, both 
geographically and in terms of 
Its range of activities. Despite 

the highly-publicised departure 

of a few star names, Saatchi 
claims to have handled success- 
fully fee inevitable problems of 
acquiring and digesting new US 
subsidiaries without destroying 
fee entrepreneurship and drive 
which made them a ttr act ive 
takeover targets in fee first 

It also believes it has devel- 
oped effective systems for man- 
aging a multi-service operation. 
It takes great pride in having 
lured into key positions a num- 
ber of experienced top manag- 
ers from outside: 

& Hie potential for securing 
extra business, and giving cli- 
ents a much better service, 
through cross-fertilisation of 
expertise, and referrals be- 
tween different parts of its di- 
verse empire. Saatchi’s latest 
annual report acknowledges fee 
difficulties of executing such a 
strategy, but asserts ' we are no- 

netheless dedicated to its 

Globalisation (point I) is a 
highly controversial topic in it- 
self; especially regarding its 
strategic and organisational 
consequences. But Saatchi is 
right to emphasise the radical 
effect of global competition, 
and fee globalisa tion of certain 
products and markets, on the 
stru c tur e of both business and 
finawnial services (though not 
necessarily on the cross-over 
between them). 

Point 2 (the benefits of scale) 
also has its controversial as- 
pect, but again it does not nec- 
essarily detract from the 
Saatchi argument 

Point 3 (fee transferability of 
management skills and experi- 
ence) is fine in principle, 
though there are many shades 
■of difference between the man- 
agement of accountancy and 
consulting, for example, let 
alone between advertising and 
financial services. But, as in 
manufacturing, management 
expertise can be transferable - 
to a degree, at least 

It is on fee fourth and fifth 
points that Saatchi’s case be- 
comes most controversial. Is 
Saatchi as good as it says it is at 

managing a far-flung, fast-grow- 
ing and diverse services em- 
pire? In particular, has it found 
an effective balance between 
the continued decentralisation 
of entrepreneurial units (on 
which it prides itself), and fee 
exploitation of those 'family 
connections” between disparate 
units which - in fee final analy- 
sis - will be crucial to fee suc- 
cess of fee entire strategy on 
which the whole Saatchi empire 
has been constructed? 

The Saatchi camp has put 
much emphasis this week on its 
feeling that investment analysts 
and the media have always ex- 
aggerated fee importance of 
such cross-referrals to its cur- 
rent and fixture success. 

Instead, the company sees the 
route to eventual cross-fertilisa- 
tion as lying largely In the grad- 
ual, independent development 
of each of its units into a top 
performer is its particular mar- 
ket place. Once that has hap- 
pened, goes fee argument, 
cross-referrals will start occur- 
ring almost of their own accord: 
both from within the Saatchi 
empire (as unite start wanting to 
refer business to each other), 
and from outside, as senior ex- 
ecutives in client organisations 

encourage their staff to use the 
Saatchi portfolio of services. 

To a limited extent this has 
already started to happen; 
Saatchi can point to a number 
of examples in various parts of 
the group and in various coun- 
tries. Analyst Blackley confirms 
some of these gains, notably 
those that followed Saatchi's 
1985 spate of acquisitions of US 
•below fee line* consultancies 
In such fields as public rela- 
tions, sales promotion and de- 
sign- It started off at a cracking 
pace,' be says. "Since then, how- 
ever, the momentum has fallen 
off* . . 

Blackley claims this xs partly 
because Saatchi has failed to 
follow through by plugging the 
remaining gaps in Its network of 
"below the line* firms. But he al- 
so puts it down to fee excessive 
looseness of the management 
mechanisms which link fee 
company's existing network. He 
considers feat WCRS, a leading 
British advertising agency, 
which recently started follow- 
ing Saatchi into other market- 
ing services as well as manage- 
ment consultancy, is already 
showing signs of developing a 
more effective way of m an aging 
interrelationships within the 

The dilemma facing both 
Saatchi and WCRS is how to 
strike an ideal balance between 
decentralisation and indepen- 
dence on fee one band (a key 
motivation fbr any group of con- 
sultants or "creative” special- 
ists), and co-ordination cm the 

Though particularly acute for 
knowhow-intensive firms in ad- 
vertising and consultancy, this 
is just as hot a current topic 
within almost every type of mul- 
tinational company, from Uni- 
lever to BP. 

In Saatchi, fee prime mecha- 
nism for co-ordinating such in- 
ter-reZationships at present is a 
regular, but informal, meeting 
of senior representatives from 
all over the group. At least one 
very senior Saatchi executive 
feels strongly enough to speak 
openly fbr a strengthening of 
the system. Scott Anderson, 
chairman of MSL International, 
a prime recruitment consultan- 
cy offshoot, advocates "a slightly 
more formal co-ordination of 
the group’s experiences wife 

S articular clients. In no country 
oes fee group have a local fo- 
cal point Most senior people in 
Saatchi are terrified of any- 
thing that looks like bureaucra- 
cy - there’s very Little structure 
in fee middle.* 

Even insiders who are com- 
plete supporters of the Saatchi* 
management approach admit 
that it is in a state of flux. As it 
stands, therefore, fee Saatchi 
approach is certainly not a 
proven model capable of direct 
transfer to the management of a 
diverse financial services 

Hie whole concept of cross- 
referrals is also hotly disputed 

between advocates of ^service 
supermarkets" and supporters 
of specialist firms. Dean Berry, 
a business school professor and 
senior partner of MAC, a lead- 
ing management consultancy, 
says "specialist business ser- 
vices are professionalising so 
fast feat mast clients don't want 
or need one-stop sho pping ". In 
fee majority of client organisa- 
tions fee contact points for each 
particular service are "Scat- 
tered all over the place, and at 
various levels. It’s a very com- 

of Saatchi 
and WCRS can persuade their 
clients’ chief executives or mar- 
keting directors to recommend 
the use - or just fee consider- 
ation - of its full panoply of ser- 
vices, there are all sorts of rea- 
sons why their underlings may 
fail to comply. 

If such cross-overs are diffi- 
cult to create and exploit mitten 
the business services sector, 
what chance of them working 
between business and financial 

The near-universal move of 
accounting firms into manage- 
ment consultancy over recent 
years might appear to be a con- 
crete example of precisely this 
trend.' But in many ways ac- 
counting is more of a business 
service than a financial one. 

Equally, fee recent move by 
UK banks into estate agencies 

‘Most senior people in 
Saatchi are terrified 
of anything that 
looks like bureaucracy’ 

is also semi by most financial 
services experts as a natural 
"fit*. Estate agency has more to 
do with financial than with 
business services, according to 
this argument. 

As a prime example of its 
strategy operating in the re- 
verse direction, the Saatchi 
study cites Deutsche Bank's 
purchase last month of Roland 
Berger, West Germany’s largest 
independent management con- 

Yet several European acqui- 
sition experts, such as- Martin 
Waldenstrom ofBooz, Allen and 
Hamil ton, fee management con- 
sultancy, see this as a peculiar- 
ly German affair, arising from 
the unusually close advisory 
role that German banks have al- 
ways played for their corporate 

Even if Saatchi does pull off 
an unlikely string of coups in fi- 
'naheial senrice^n wiH be left 
facing what another consultant 
calls 'enormous cu ltural prob- 
lems*. Hie worlds of business 
and financial services are very 
far apart, and it will take a lot 
more to marry them than just vi- 
sion, drive and a management 
style which has still to prove its 
staying power. 

Giving someone a Cross 
pen isn't necessarily a sign that you 
love them. True, many are given as very 
personal gifts. 

But a Cross writing instrument can 
also express more businesslike sentiments. 

It can say “thank you fbr your efforts” 

Not every Cross 
comes with a kiss. 

and. “keep up the good work" to your 

Or it can serve as a gentle reminder 
to your customers. Even as a gesture of 
appreciation to your suppliers. 

Whatever your reason for giving, a 
Cross pen is certainly a most memorable gift. 

After all, it is unquestionably one of 
the worlds finest writing instruments. 

To make a single Cross pen takes no less 

iWn: M totfrdUa&MKSnt 

CnxorkStna, Luton, Beds LU2 OJD. ‘EL- (05 S2) 422793. TEE logo iqtod is 

150 separate operations. 

Every component is machined to an 
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The result is a writing instrument 
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to treasure fbr a lifetime. 

Indeed, it is backed by a lifetime 
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And when^a Cross pen incorpor- 
ates your company’s logo, you can be sure 
it will always be remembered as a gift 
from you. 

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fbr more information, telephone our 
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but the promise of some* |J \J 

dwig for more enduring, since 1846 



We are searching for like nwnd^ 
in fee business world. You may 
become clients, investors, invest- 
ments, partners or part of fee 
network at Piper Trust. 

You have probably responded 
instinctively to the word vision, 
because you believe that this is 
whar drives the most successful 

Piper Trust is an innovator in fee 
retail and leisure industries, 
working wife large corporations, 
small entrepreneurs and on its own 
to create, in each case, a unique 
sense of purpose and competitive 

We look quietly but continuously 
for ' those who share common 
beliefs in the routes to exceptional 
performance, and specifically for: 

■ Individuals of outstanding 
creative and analytic ability to 
join oar consulting team 

■ Retail entrep r e n e ur s in 
search of fends for their new 
v entur e s 

a Talent from fee retail 
industry, with experience in 
merchandise or operations 

If you would like to know more about our philosophy on vision, 
and see if it matches your own, 
please contact: 


Crispin Tweddell or Libby Bowring 
Piper Trust 

182-184 Campden Hill Road, Kensington W8 7AS 

Tel: 01-727 3886 

- S ■ 


JT - 

• -‘a 
i - 

'/ V 



A bicycle? 

• ---r-icesj: 

** -i- 


>' ’ji’T-iieaiE 


///h n\\- c^#6 

K x ^# 

Not a bicycle? 

’vX . /I *.:.•• V,/ 

Bring bicycle parts into Britain from Taiwan, and 
you’ll pay duty of 8%. 

Bring in complete bicycles, and you’ll pay 17%. 

A simple enough arrangement, surely? But as one of 
our clients discovered, there’s a snag. 

When is a bike not a bike? 

Our client was importing a consignment of bicycle 
parts, including handlebar-stems, all on the same ship 
from Taiwan. Naturally he declared them as ‘parts! liable to 
the lower jrate of duty. 

When the ship docked, the parts were seized by 
Customs and a duty of 17% slapped on them. Customs 

said they were ‘bicycles! Our startled client even had to pay 
an extra penalty to get the parts back. 

He’d* run into an international customs rule that 
basically says a collection of parts is a finished product if it 
represents the ‘essential character’ of that product. 

That’s when we rode into action. And after carrying 
out a detailed examination of the customs rules, we found 
a way round the problem. 

Take out the handlebar-stems. 

We concluded that, in this particular instance, the 
handlebar-stems should be shipped in separately. The 
rest of the consignment could then be declared as ‘parts* 

not ‘bicycles’, and the duty would only be 8% not 17%. 

Strangely enough, it seems that a consignment of 
handlebar-stems, frames and forks could still be ‘bicycles! 

It’s a complicated story, this saga of the bicycle- 
parts, but it does make a point about our attitude. 

We take a freewheeling, innovative approach. We’re 
not stuffy and remote, we like to get involved in the nitty- 
gritty. (We work at Southwark Towers, not Ivory Towers.) 

Occasionally, we can even be seen in bicycle clips. 

Price Waterhouse 






y business 

st such 






*k Like tea in bags or coffee in granules, many people have 
ever fully got to sriDS with t 

Call them old-fashioned, but neither have the people at 


Fly Piedmon t’s Busines 
satlantic and, once 

, chosen, your wine is opened as 

TTi?l I ^ should be: at your seat with 

^ a corkscrew. 

It’s the sort of touch you might expect from an airline 
ails from one of America’s south 
Clich6 it may be, but that good ol’ southern hospitality is the 

same in a pressurised cabin high above the Atlantic as it is in a 

log cabin deep in the Blue Ridge Mountains. 

The same goes for southern cooking. 

Start with the delicious Chesapeake Bay Prawn Satay, 

Try Braised Duckling Grand Chartreuse to follow. (The 
Pilaf Rice with peppers is particularly sympathique.) 

And round it off with a fresh fruit dessert or cheese and 

coffee. Or, if you must, both. 

It’s a six-course, h la carte meal and, in all but name, a first 

class service, right down to the fresh flower in a crystal vase 
on every table. 

mous with service in the States. 

In 1985, it walked away with Air Transport World’s prestigious 

Airline of the Year Award (won in the past by such as Swissair 

and Lufthansa, won since by BA). 

Its current, independently monitored ratio of complaints 

received per 100,000 passengers carried is, at 1.08, barely a blip 

on the scale. 

d such is the loyalty Piedmont inspires that when, last 

year, an influential 

azine asked its 


readers to name their favourite US airline, Pi 

came runner-up without even being on the survey. 

Little wonder then that Piedmont is America’s fastest 

growing major airline, carrying more than 24 million passengers 

last year. (Compared to British Airways’ 18 million.) 

And that Charlotte, its main hub, has become a major 

US airport, handling 290 Piedmont departures daily to 58 

US cities, including the 16 largest. 

For transatlantic passengers, this means two things. 

First, you’ll be flying to the most central, the most con 

venient gateway on the eastern seaboard. 

And second, you’ll be flying to the fastest. 

At Charlotte, Piedmont promises that you’ll clear Immi 

gration, Baggage Reclaim, Customs and be ready for your connect 

ing flight inside an hour. 

On the ground and in the 

air, flying Piedmont from 

Gatwick to Charlotte/Tampa is 

the civilised way to the States. /98SS9ZG9KT 



r Swissair 

e!v a blip 


to - 


Financial Times Friday: September 18 1987 


David Lascelles talks to the hard-driving chief executive of Shearson Lehman Brothers 

Banking on benefits of a cost-cutting exercise 

"WHAT WE DID is something 
that many other firms will be 
doing," predicted Ur Peter Coh- 
en, chief executive of Shearson 
Lehman Brothers; the US in- 
vestment bank. 

He was referring to Shear- 
son’s announcement earlier this 
week that It was making 250 
people redundant from its Lon- 
don office - a move which un- 
derlined the growing cost pres- 
sures in the City post-Big Bang 
and the hard look which finan- 
cial institutions are now taking 
at themselves. 

Ur Cohen, who is on a three- 
day visit to London from New 
York, was speaking in Shear- 
son's smart new glass and steel 
offices in Broadgate, where It 
has pulled together its sprawl- 
ing London operations. 

He has a reputation as a cost- 
cutter. Aged only 41, he is wiry 
with short-cropped black hair 
and ma k es his points by stab- 
bing the air with a Cat cigar. In 
five hard-driving years in the 
job, he has built Sbearson into 
one of the leading US invest- 

ment banks, and a major compo- 
nent of the American Express 

The London cuts, he said, 
were part of a world-wide re- 
view of Shearson’s operations, 
which had also included some 
small job losses in New York 
and a boost to Shearson ’£ staff 
in Tokyo, where a big build-up 
is afoot However, he suspected 
that all big US investment 
banks were facing the same 
problems; Shearson just hap- 
pened to encounter them first 

As world capital markets ex- 
panded over the last couple of 
years, be said, no large house 
could afford the luxury of tak- 
ing a step back and waiting to 
see what happened. So they all 
expanded fast in the US. Lon- 
don and Tokyo, adding enor- 
mously to their costs without a 
clear idea of where the new 
sources of profit would be. On 
top of that, the recent decline of 
the US bond markets had 
brought heavy trading losses. 

Peter Cobra; acquisition habit is 
deeply ingrained 

to look and see which busi- 
nesses were profitable, which 

"Last year, we had put a lot of we should contract or run dif- 
pieces in place, and we wanted ferentty." 

Shearson does not Intend to 
withdraw from any lines oif busi- 
ness in the UK, where it is ac- 
tive in corporate finance, com- 
modities trading, fend 
management and securities 
dealing. Market-making is being 
trimmed, although Mr Cohen 
said it coold expand again as 

ma rk e ts improved. 

"We have had a tremendous 
amount of capacity come into 
the business. Far more than was 
justified. We have to get that ca- 
pacity in line with the realities 
of the market" 

The London operation re- 
mains a vital part of Shearson's 
international strategy, both as a 
bridge between Tokyo and New 
York and as a springboard for 
the company's business in Eu- 
rope. Shearson is estab lishi ng 
itself in several continental 
countries in anticipation of the 
liberalisation of EC capital 
markets in 1992. 

Shearson was the only US in- 
vestment bank which bought a 
UK stockbroker - L. Messel - for 
Big Bang. The firm has now 

been completely absorbed, al- 
though the wisdom of that move 
has been questioned by other 
US banks which preferred to 
build up their own business. 

Shearson - unlike other US 
houses such as Salomon 
Brothers and Goldman - is itself 
the product of more than 100 ac- 
quisitions. The habit is deeply 
Ingrained. Some observers have 
commented that, if anything, 
Shearson was slow to cut the fet 
out of MesseL Often, people get 
their cards within days of their 
firm being bought up by Shear- 

Mr Cohen declined to detail 
the profit performance of the 
London business. He believes 
that the US firms which will 
succeed internationally are 
those with a diversified busi- 
ness, which can trade a wide 
range of products and possess 
the capital to shoulder very 
large deals themselves. He nat- 
urally counts Shearson in that 
category, but believes that only 
half a dozen other US firms 

Textile capacity falling behind 


THE GULF between the UK’s 
manufacturing capacity in pri- 
mary textiles and that of Italy 
and .West Germany, Europe’s- 
biggest producers, is continuing' 
to widen dramatically, accord- 
ing to the latest figures on ma- 
chinery installation. 

- Britainnow ranks only about 
seventh In overall spinning ca- 
pacity withizr the EC and sixth 
in weaving, measured by statis* 
tics from the Swiss-based Inter- 
national Textile Manufacturers 
Feder ation . 

The UK's position in size and 

re-investment appears- to be 
still sliding. For example, last 
year Italy Installed , more than 
200^)00 nev spihdles far cotton, 
artificial fibre and wool spin- 
ning, an area in- which it is al- 
ready four times as large as 

Vest German .textile compa- 
nies purchased half, that 
amount but installation bf new 
spindles in Britain was almost 

The UK did introduce last 
year &800 new machines known 
as open-ended rotors which are 
between three and six times as 
productive as traditional spin- 

ning machines. That figure, 
however, was much lower than 
in Spain, France, West Germany 
and Portugal and compares 
with the 22,000 rotor machines 
installed by Italian textile com- 
panies in 1986- 

Weaving machinery tells a 
similar story, although the dis- 
parities are not so great British 
‘ textile companies bought 450 
new looms last year, according 
to the federation. Italy, howev- 
er, installed 4JS00 new looms,; 
more than a fifth of the UK’s to-' 
ta! capacity in looms for cotton, 
artificial fibre and . wool weav- 

. Mr Herwig Strolz, the federal 
tion's director, said: It is a sad 
story for the UK The figures 
show the astonishing growth of 
Italy in textiles and. the consoli- 
dation of Vest Germany , as Eu- 
rope's second textile economy.” * 

The federation - figures' are 
based on shipments of new ma- 
chines from 75 maters of spin- 
ning and weaving machinery 
around the world. The compa- 
nies account for virtually all 
worldwide production of these 

The figures do not include 
knitting machines, nor any of] 
the equipment used In finishing] 
or the making up of dothingj 
British companies in primary] 
textiles have been ma k i n g good 
profits and in one area, wool 
spinning; the UK is second, in 
the EC league table of produc- 
tion capacity. 

The federation says the statis- 
tics provide an accurate guide 
to the relative size of countries 
in primary textiles and their 
re-investment programmes. Fig- 
ures due to be released towards 
the end of the year will show 
♦hat the age profile of machines 
in the UK primary textile indus- 
try is one of the worst in Eu- 

Up to the start of last year, the 
UK's total spindle capacity was 
2 . 6 m, compared with 5£m in Bar] 
]y and 2.4m in West Germany. 

During the past 10 years, Ital- 
ian textile companies have pur- 
chased 3^000 or the highly pro- 
ductive shuttle-less loom. West 
German companies have taken, 

16.000 and French companies 

12.000 but UK textile producers 
have bought just 4,600. 

But how attractive will her pension be? 

If Deutschmark investments are part 
of your pension fund strategy, you are 
familiar with the variety of DM instru- 
ments available. But, there are subtle 
differences in yields, liquidity, maturity, 
and depth of the market. There are 
yet other considerations which may 
require tailor-made solutions. 

Our experts in Diisseldorf and 
London would like to talk to you about 
them. WestLB is one of the leading 
German banks issuing DM bonds. After 
all, we have over DM 60 billion in 
circulation worldwide. When the future 
of young people is at stake, make sure 
yourplans include WestLB. 


The Westdeutsche Landesbank. 

Dussetdorf Herzogstrasse 15, 4000 DQssekJorf 1, 
Telephone {21 1 ) 82601, Telex 8582605 

London 41. Moorgate, London EC 2R 6AE, 
Telephone (1 ) 63861 41, Telex 887984/5 

Orders seen for 
ATP airliner 

By Michael Donne 

BRITISH Aerospace yesterday 
dismissed suggestions that its 
new 64-72 sealer airliner, the 
twin-engined Advanced Turbo- 
prop or ATP, was in trouble be- 
cause of lack of sales. 

BAe said its concern about 
fee ATP was negligible. It said; 
"Our confidence grows every 
day. We are hopeful orders are 
on the way. We are in deep ne- 

So for only two customers 
have placed orders for the air- 
craft - British Midland, which 
is buying five, and Leeward Is- 
lands Air Transport, which is 
‘buying four. 

craft, and will define and pro- 
mote the type for use by the 
Ministry of Defence and com- 
mercial aircraft operators. 

Boeing and Bell believe that 
the aircraft are ideal for flights 
between city centres. They are 
collaborating in studies which 
are being conducted by the Port 
of New York Authority into 
their use between New York 
airports and destinations with- 
in 300 miles of Manhattan. 

The US National Aeronautics 
and Space Administration, also 
in conjunction with Boeing and 
Bell, has undertaken studies to 
define a series of possible tilt- 
rotor designs for inter-city com- 
muter use. 

BAe to join US groups in tilt-rotor study 


BRITISH Aerospace is to join 
with Boeing Helicopter and 
Bell Helicopter Textron of the 
VS to study the possibilities of 
developing tilt-rotor aircraft in 
the UK 

i These aircraft use a variation 
(of vertical take-off techniques. 
Wing-mounted engines in a ver- 
tical position enable take-offs 
and landings like a helicopter, 
but the engines are then tilted 
through 90 degrees into the hor- 
izontal to permit conventional 
forward flight 

In that way, tilt-rotor aircraft 
can get into and out of restrict- 
ed spaces while performing in 
flight like fixed-wing aircraft at 

speeds of up to 300 knots. 

The world’s first tilt-rotor air- 
craft. the V-22 Osprey, is being 
developed by Boeing and Bell 
in the US under a $1.7bn con- 
tract from the Defence Depart- 

A total of 913 tilt-rotor V-22s 
are to be built for the US armed 
services with the first aircraft 
due to enter service in late I99L 
The first flight of the V-22 is set 
for the middle ofnextyear. 

Under the deal announced 
yesterday, British Aerospace, 
through its Military Aircraft Di- 
vision, will conduct assess- 
ments of the military and civil 
markets in the UK for such air- 

In the UK the aircraft would 
be suitable for the London City 
Stoiport, which starts services 
oo October 26. Eventually, com- 
mercial tilt-rotors could be pro- 
viding services from that air- 
port to near Continental cities. 

In Western Europe, a group 
called Eurofar (European Fu- 
ture Advanced Ro tore raft) is 
studying the possibility of de- 
veloping tilt-rotor aircraft for 
civil and military use. The Eu- 
rofar participants include 
Aerospatiale of France. Aerital- 
ia and Agnsta of Italy, CASA of 
Spain, Messerschmitt-Bolkow- 
Blohm of West Germany and 
Westland Helicopters of the 

for inner cities 


A CALL for an injection of pub- 
lic money into inner city regen- 
eration will be made today by a 
group of 15 Conservative MPs 
from the- Home Counties and 
the West Country. 

They have produced a pam- 
phlet suggesting that about six 
cities should each receive up to 
£30m in "pump priming* capital 
for a new generation of urban 
development corporations. 

The likely candidates would 
be Leeds, Sheffield. Bristol, 
Cardiff, Southampton, 

Middlesbrough and Rotherham. 

The proposal comes after it 
was made dear at the start of 
Mrs Thatcher’s inner city tour 
on Wednesday that the Govern- 
ment would not be able to find 
extra money for inner cities. 

However, the MPs say: It Is 
essential that public sector in- 
vestment in them is more than 
matched by private capital in- 

They also say there is a strong 
case for using the revenue from 
the sale of the land and capital 
assets of the new town corpora- 
tions to fund the new urban de- 
velopment corporations. 

They estimate that £2bn will 
be released by this means and 
argue that some of it should be 
used to fund the next phase of 
urban redevelopment 

"It may even be possible to tap 
some of the London Docklands 
Corporation’s profits for this 
purpose," they say. 

They also want the creation of 
'cashless" development corpo- 
ra lions on an experimental ba- 
sis in such towns as Leicester, 

Nottingham and Derby. These 
would take over planning and 
development controls from the 
local authorities to speed up 
housing and other develop- 

Their, proposals are con 
mined in a Conservative Politi 
cal Centre pamphlet entitled 
This Pleasant Land by Mr Ni- 
cholas Baker, MP for North Dor- 
set, and Hr Jerry Wiggin, MP for 
Weston-super-Mare, a former 
parliamentary secretary at the 
Ministry of Agriculture with re- 
sponsibility for land and plan- 
ning. They have the backing of 
13 other Tory MPs. 

The main thrust of their argu- 
ment is the need to reverse the 
drift to the south-east and to 
prevent overdevelopment in ru- 
ral and green belt areas. 

They complain that inner city 
councils and some public sector 
owners are hanging on to land 
in the inner cities. To stop this 
they suggest a public auction 
system to allow developers to 
serve notice on local authori- 
ties or state bodies that their 
undeveloped urban land should 
be auctioned within three 
months. The h ighe st bidder 
would acquire the land and 
would have to commence devel- 
opment within a year. 

The pamphlet calls for a na- 
tional land use survey to deter- 
mine how much land is suitable 
for housing and other develop- 
ment in the cities. 

This. Pleasant Land, A New 
Strategy for Planning, Conserve 
twe Political Centre. 32 Smith 
Square , London SWIP 3HH.CL95. 

Industrial design 
standards attacked 


BRITISH manufacturing indus- 
try was criticised yesterday for 
mediocrity in product design. 

Mr Simon Hornby, chairman 
of the Design Council, said: 
Though there are some exem- 
plary companies, the general 
standard of design management 
in companies in Britain is noth- 
ing like good enough— and me- 
diocrity in design is the role/ 
He blamed managers for fail- 
ing to recognise the necessity of 
good product design and for 
flailing to make fell USB of the 
outstanding talent available.. 

Speaking at a press confer- 
ence to mark the council’s 1966 
annual report, he said: "Indus- 
trial output may be improving, 
bat this does not necessarily 
mean the design element is be- 
ing treated more seriously.* ■ 
He cited the spiralling imbal- 
ance of imports to exports as 
forther evidence that British 
design was not good enough. A 
high proportion of products 
submitted to the council’s own 
good design label scheme had 
been rejected because the de- 
sign was simply not. good 

There is still a need to con- 
vince many top managers that 
design is important enough to 
demand their personal atten- 
tion and commitment," he said. 
As a result of the current in- 

dustrial renaissance the role of 
the Design Council was even 
more urgent than ever, said Mr 

The two main priorities re- 
mained to convince industry of 
the vital but integral impor- 
tance of design in the manufac- 
turing, process and to advance 
design education at all levels 
starting from primary sc hool. 

The council is urging the Edu- 
cation Secretary to secure de- 
sign education as part of. the 
core curricula in future, not as a 
discrete study but pervading all 
subjects from physics, to tech- 
nology and art 

In the year since the appoint- 
ment to the governm en tftmded 
council of Mr Hornby, who Is al- 
so chairman of W. H. Smith, a 
number of initiatives have been 
set in motion to improve the ef- 
ficiency of the oft-criticised 



lere will be fewer and more 
focused exhibitions, a review of 
the effectiveness of the design 
label scheme and a new post 
has been created for a market- 
ing head to develop revenue- 
earning activities. 

The idea is to boost income 
through sponsorship and other 
activities. Government fending 
has so far this year reached 
£33m, which equals the total 
sum awarded last year. 

Large rise seen in sales of 
books on money matters 


SALES OF books about busi- 
ness, personal investment and 
family money matters are show- 
ing enormous rises and, in the . 
post-AIDS world, explicit sexu- 
al-technique books are in rapid 

These changing trends in 
book-buying habits emerge 
from a survey of the reading 
habits of the 400,000 members of 
The Leisure Circle, the UK 
book club owned by Bertels- 
mann, a West German publish- 
ing company. 

About 70 per cent of the cir- 
cle’s members, largely re- 
cruited by door-to-door sales- 
men, have never bought a 

hardback book before, the sur- 
vey shows. 

Mr Gerhard Janetzby, manage 
. ing director, said: *We are sell- 
ing books to people whofor the 
most part have never thought of 
going into a bookshop.” 

A new Barbara Taylor 
Bradford, author of books such 
as A Woman of Substance, may 
sell between 20,000 and 30,000 
copies through general trade 
publishers but 120,000 through 
the circle. 

Literary works in hardback by, 
a -traditional publisher can 
reach bestseller lists with sales 
of $000 copies but sell hp to 
30,900 a year with the club. 

BBC local 
radio chain 
‘to be 

By Raymond Snoddy 

THE BBC Is to complete its 
chain of local radio stations in 
spite of having to cut overall 
costs because its licence fee 
had been tied to the Retail 
Price index. 

Mr Michael Checkland, BBC 
director general, last night an- 
nounced that seven more sta- 
tions had been approved, when 
opening the Royal Television 
Society’s Cambridge Conven- 

The. stations^ to be built in the 
next three years, will give ac- 
cess to BBC local radio to 4m 
potential listeners in 
Gloucester, Hereford and 
Worcester, Wiltshire, Suffolk, 
Surrey, . Berkshire, Warwick- 
shire and Dorset They will 
bring the chain of BBC local sta- 
tions in England to 39. 

Mr Checkland said the green 
paper on radio’s future in the 
UK recognised the corpora- 
tion’s public-service broadcast- 
ing role in local radio based on 
speech and news - that is rather 
than on popular music. 

He said: *We will move for-] 
ward rapidly within the re-{ 
sources we have made avail- 
able.- i 

Local radio was examined at] 
the corporation thi« year as one 
area of possible savings but the 
corporation has now decided on 
expansion by. deferring other 
capital spending and by cutting 
costs of new stations. 

Mr Checkland said the corpo- 
ration’s future horizons were 
nothing if not realistic. It would 
not follow rrv in transmitting] 
television throughout the night; 
and did not seek involvement in 
community radio. 

However, he said It was still 
looking at the possibility of ad- 
ding to licence-fee income by 
delivering a subscription ser- 
vice of films to video-recorders 
in the middle of the night, and 
was examining delivery of spe- 
cial-interest videos to closer us- 
er groups. Mr Checkland reaf- 
firmed the - corporation’s 
commitment to pnblic-servi 
broadcasting . 

He told broadcasting industry 
leaden broadcasters needed to 
do more than just ensure that in 
a democratic society the public 
had access to all the arguments. 

ITV fears 
bias in PM 

By Raymond Snoddy - 

A ROW has broken oat between 
independent television chiefs 
and Downing Street over claims 
that Mrs Thatcher's seminar on 
the fixture of broadcasting on 
Monday is biased against the 
ITV companies. 

Although there are 23 outside 
guests, no-one has been invited 
from the big five ITV companies 
which dominate commercial 
televirion production. 

The two ITV representatives 
at the Downing Sheet seminar 
are Mr David McCall, chief ex- 
ecutive of Anglia Television 
and chairman of the Indepen- 
dent Televirion Companies As- 
sociation, and Mr Bill Brown, 
managing director of Scottish 
Televi rion . 

The ITV chi eft have asked for 
a programme controller from 
one of the big five companies to 
be included on the list to . talk 
about the importance of pro- 
gramme production, but the re- 
quest has been turned down. 

ITV is also alarmed at the 
blunt nature of the briefing 
notes sent out to those attend- 
ing. . 

The briefing document com- 
ment on ITV reads: "So for as 
the ITV system is concerned, 
the Government is considering 
the Peacock recommendations 
on: (a) auctioning of contracts; 
(b) separation of Channel 4." 

Sir Alan Peacock, chairman 
of the committee which investi- 
gated the fixture of broadcast- 
ing will open the proceedings, 

Meanwhile, the ITV compa- 
nies are in increasing disarray 
over plans to back the concept 
of a filth television channeL 

. j 

& Financial Times Friday September 18 MSI 


Liberals clear way for 
talks on SDP merger 


ME DAVID STEEL, the Liberal 
leader, will this afternoon seek 
to set the policy agenda for a 
new party with the Social Dem- 
ocratic Party after the Liberal 
Assembly yesterday voted over- 
whelmingly In favour of a merg- 

' After a three-hour debate, a 
motion backing the creation of a 
new party and setting the terms 
of the talks was approved by 898 
rotes to 2L So large was the sup- 
port that a proposal for an ini- 
tial ballot of all Liberal mem- 
bers was rejected as 

However, tbe leadership was 
given a number of warnings not 

to ignore Liberal rank-and-Gle 

Yesterday's vote opens the 
way for tbe start of negotiations 
early next month after most of 
the Liberal team is elected by 
the Assembly later today. The 
SDPs national committee 
meets on Monday to choose its 

The SDPs ruling council re- 
jected by a ratio of 60 to 40 an 
anti-merger proposal at its con- 
ference in Portsmouth 2fA 
weeks ago. 

Trading members of both par- 
ties are confident that no im- 
possible preconditions have 
been set for the talks, which 
should be completed in time for 
consideration by further confer- 
ences in January with final bal- 
lots next February. 

After yesterday’s vote Mr 

Steel now wants to turn party 
and public attention away from 
internal debates towards the 
new party and the policy agen- 
da to replace Thatcherism. 

He will focus on consumer in- 
terests and on the need to in- 
crease competition in both the 
public and private sectors. 

However, a motion calling for 
’a positive industrial poli cy* m - 
volvfng government interven- 
tion was approved by 437 votes 
to 412 only after criticism that it 
was outdated involved too 
much Whitehall activity- 

During the main debate there 
were continued rumblings 
about how far tbe broad policy 
stance of the new party, as op- 
posed to its detailed policies, 
should be approved before a 

This was favoured by Mr Rob- 
ert the SDP leader, 

but opposed by prominent local 
activists, who suspect a plot to 
bounce on the new party a com- 
mitment to a continued British 
nuclear capacity. 

Mr Steel’s allies see a possi- 
ble way forward in a suggestion 
by Mr Des Wilson, the retiring 
party president now allied with 
the local activists. 

He said yesterday that the Al- 
liance's June election manifes- 
to and a previous policy state- 
ment could be *fhe starting 
point for urgent and radical pol- 
icy development by the new 
party.' This might meet SDP 

There were only a.hand M o f 
outright opponents of merger 

yesterday and it tos sgmficm^ 

that some of the doubters, 
sought to minimise differences 
vith their local council allies 
by supporting the motion. 

However, traditional L 

suspicion of the leadership 

reflected in strong support for 
an amendment on the composi- 
tion of the negotiating team; 
which would not have made the 
party leader or his nominee an 
automatic member. This was 
only defeated by S71 to 527. 

Ms Becky Bryan a Stamford 
delegate, called for the merger 
to be achieved as fast as possi- 

•We have tried the patience of 
the electorate. A lot of people 
want a proper radical alteroa- 
tive-but somehow we have put 

our foot in it a bit" 

She warned delegates that the 
new party would have to move 
quickly to head off Labour at- 
tempts to gain the middle 
ground of politics. 

Ms Fran Oborski from the 
West Midland . gave a warning 
against adopting too tight a 

It’s better to take time now 
and get it right, rather than rush 
it and make a few mistakes we 
could repent for a very long 
time," she said. 

Conference reports," FUge 13 

London casino stake 
sold by Goldsmith, 
Aspinall for £ 90m 


colourful international finan- 
cier, and Mr John Aspinall, the 
zoo owner, are cashi n g in their 
«*hips in Aspinall Holdings, the 
London Mayfair casino operator 

and investment company. 

They have agreed to sell the 
company- where they own a 7812 
per cent stake • for £90m to 
Alfred Walker, a former Bu> 
gingham housebuilder now be- 
ing turned into a property and 
leisure group by former Plea- 
suzama chief executive, Mr 
George wartin, and Mr Peter de 
Savary, the financer and yaichs- 
map The company is quoted on 
the Unlisted Securities Market 

"It’s a name of high quality," 
declared Mr de Savary, yester- 
day, "and X believe we can take 
it into other leisure activities. 

Mr Aspinall, a former founder 
of the Clermont Club, opened 
the casino in Knightsbridge in 
the Late 1970s with financial 
help from Sir James. 

The company came, to the 
market shortly before its move 
to freehold premises in Mayfair, 
capitalised at just un der £6 0m. 
The issue, however, proved a 
big success with stockmarket 
punters and the shares soared 
to an opening premium of 42 per 
cent, valuing the business only 
£5m short of yesterday’s sale 
price. . , 

Yesterday Mr Martin revelaed 

that he had attempted to buy 
the company for £l25m about 18 
months ago, in his Pleasurama 
days, but failed to win agree- 
ment Mr de Savary, too, made 
an earlier approach to Sir 

The lower purchase price, 
said Mr Martin, was partly jnsti- 

climate. The absence o? Arab 
•high-rollers" - one quarter of 
Aspin all’s customers - has hit 
all London casinos, and in the 
last fall year AspinaD's "drop" 
fell from £146.4m to £U4.7m. 
Profits in 1985-88 were£7.3m be- 
fore taT . and in the six months 
to March 1987, it made £4.42m. 

Walker, which is almost trebl- 
ing its size via the acqnistion, 
has agreements with Mr A 
all and Sir James for the — „ 
out of Aspinall’s non-casino in- 
vestments - including a £14.8m 
position in the copper market 
This should guarantee that As-. 
pinalls receives around £25m in' 

The terms are either 51 Walk-! 
er shares for 100 Asp malls or 
173p in cash. Sir James and Mr 
Aspinall are taking cash in re- 
spect of the bulk of their com- 
bined holding - £58w5m - but re- 
taining 29m Walker shares, 
about 6 per cent of the company^ 
Yesterday, Walker shares shed} 

Private investors in BP sell-off 

will be 


PRIVATE ^Testers aPPjjgf 
for shares m next mouths 
£7 «ihn British Petroleum share 

vet; will be offered a package of 
Special inducements 
g^shares, NM Koths^ild, 
ladviser to the Governmenton 
[the issue, announced yesterday- 
[ Although most recent priva- 
tisations have included Donas 
Minxes for loyal shareholders, 

fete the first time thata^le 
Ufsbares in a company already 
Emoted on the London Stock 

GSanpe h* R been sweetened in 

Ench a way, and 
Government’s desire to raaioe 
fee BP issue as attractive as 

ore new share ibr e»wy 10 hdd 

for three years, up a maxi- 
Sum of MO bonus shares- we 

ossible to smau mve»««»- 

SSm to British investors 

32! ft privatised at the 

end of last year. 

Further inducements In the 
BP sale include selling tee 
shares on a partly paid baste, 
and pitching the minimum ap- 
plication .at a low leroL Kpps- 
child said yesterday the mimi- 
mum investment would be 
about £250, with a ^ 
ment of no more than £X0(k This 
again is the same level chosen 
forthe British Gas privatisa- 

Rothschild yesterday ex- 
pressed satisfaction at the re- 
sponse so far to the ,5 P j^2id 
marketing drive, which it said 

was attracting more than 
150,000 responses a day from, 
shareholders. So far 3.75m peo- 
ple had registered their inter- 
est, a higher level of response 
than at this stage in any previ- 
ous privatisations, the bank 

Payment for tbe shares will 
be made over the next 18 
months. The first instalment - 
likely to be about one third of 
the total price - will be payable 
in October, with the second in* 
stalment In August next year, 
and tire final in i^nil 1989. 

* Mr Anthony Alt, a director of 
NM Rothschild,, said yesterday 
those terms would increase the 
yield on the shares, which he 
estimated in the first year could 
be about 10 per cent on the part- 
ly paid shares. 

Coal overtime ban goes ahead 


THE PLAIJNED^overttoB to “r^^nion executive decided 
to Britain’s to l £mt the ban to coal produc- 

ahead from nert Mondy. after development work in 

the National Umon of Mae This was seen to re- 

workexs mad British Coal ygg; Qect many miners’ fears of a 
terday failed - , ?ng ^pute so soon after 

referring to Smd^iysl9a4-85 strike, 

dispute over the industry's dis- Ui ^£££ ltive to seek 

iop linaxy cone- reference to arbitration by 

Acas, ^ J^ v n e Sf^ aiPPdrt ' 
work and should, therefore, said that while it 

’did not consider the is sue at 
to be suitable for decision 
by arbitration, it was 'always 
happy to meet Acas" - on two 

These were that the NUM 
should call off its threatened 
ban and accept British Coal’s 
right to determine at which pit 
any dismissed miner should be 
re-employed. The union could 
not accept this. 


A first-class finish is vital to Arenson 
International, makers of high quality, wood 
veneered President office furniture. 

But they Sound that drying their l acquers 
with gas-fired steam batteries was proving 
less than satisfactory and taking far too long. 

So after consultation with their local 
Electricity Board they decided to switch to a 
new ultra-violet lacquer-curing system. 

Immediately quality improved and pro- 
ductivity increased greatly Process time was cut 
from 50 to 3 minutes, with faster start-up, and 
weekly instead of nightly cleaning. Improved 
■working conditions were an added bonus. 

The £38,450 saving per annum on 
energy and materials alone brought a 3 year 
payback; production increased, overtime 
decreased. Altogether a thoroughly polished 

But the final words should come from 

Arenson themselves: “If we had to put in 

another finishing plant, there is no question at 
all it would again be an all-electric system . 

This is but one example from thousands 

of companies each year who invest electric 
and profit 

Like pharmaceuticals manufacturer 
Pharmax Ltd, who changed to an electrode 
boiler operating on low-cost night-rate 
electricity and cut the cost of producing raw 
materials for baby creams by 80% - automatic 
dose control of temperature and pressure 

resulting in higher material yields. 

Qr like Barzillai Hingley who 
manufacture forging? for marine and general 
engineering. Their change from oil-fired 
furnaces to induction heating prior to forging 
has improved productivity by 20%, cut down- 

time by 90%, energy costs by 60%, and repaid 
capital costs in less than 12 months. 

Find out more about how your company 
could benefit Ask for the Industrial 
Sales Engineer at your Electricity 
Board or simply dip the coupon. 

B a 

□ pfc^smdnieyBarVllSviilroeMSBBe'El«iiicitjr--P>«sical 

fadp for industry*. # 





^Energy for Life 

TteEltrtrk^CoraciLEn^^and’Vftks | 

Banker will head 
Takeover Panel 


ecutive director of Hambros 
Bank, was yesterday named as 
tfae next director-general of the 
Takeover Panel, the top staff 
Mutton at the self-regulatory 
w atchd og for City of London 
mergers and takeovers. 

Ur Beevor, aged 47, will as- 
sume his position on December 
U. like his predecessor, Mr 
John WaJker-Haworth, Mr Bee- 
vor has been seconded to the 
panel for two years: Mr Walker- 
Haworth is to return to S.G. 
Warburg. . the merchant bank, 
when his term ends. • 

The new director-general, the 
first to be supplied by Hambros, 
is returning to the panel after 
an absence of 18 years. He 
served as secretary of the panel 
In 1009-71, part of his 25 years’ 

experience in takeovers both as 
solicitor and merchant banker. 

Tbe executive guides and 
rules on toe conduct of take- 
overs^ ffiftmwgh participants 
have, toe right of appeal to the 
fan pan eL This was nsed vester- 
day in toe case of the late bid by 

Crownx, the Canadian financial 
services group, for two money 
brokers owned by Mercan t ile 
House, the British financial ser- 
vices. company which has 
agreed to a takeover by British 
A Commonwealth Holdings. 

Mr Beevor was chosen by Mr 
Robert Alexander, the banister 
who has been chairman since 
July, with the approval of the 
Bank of England. He will re- 
main on the Hambros payroll, 
but the panel will frilly reim- 
burse the merchant bank. 

All but four members of toe 
panel’s 16 permanent staff are 
seconded from government or 
the City. 

Tbe panel plans to revise the 
.wording of roles governing dis- 
closures of stakes held in com- 
panies involved in takeovers. 
The change will not affect toe 
new thresholds brought in Feb- 
ruary - requiring holders of 1 
per cent, or more 'of a company 
to disclose any change In their 

Men and Matters, Page 24 

travellers to Paris 


unveiled the City class service 
which it proposes to offer busi- 
ness travellers from the London 
City Airport when It opens on 
October 26. 

The service will include a Ci- 
tyclass dub and lounge at toe 
airport, where members will be 
able to buy duty-free goods. 

Passengers will also be able 
to book cars while in-flight, 
through an agreement with Eu- 
ropean and taxis if agreement 
can be reached with the taxi au- 
thorities. Tickets for local trav- 
el using public transport at 
Charles de Gaulle airport; Par- 
is, and for buses from London 
jCity Airport to the City will also 
tbe available on the Paris 

Mr Charles Stuart, chairman 
and chief executive of Brymon 
Airways and a former market- 
ing director of British Airways, 
said he wanted Citydass to be 
accepted by potential passen- 
gers in the way that British Air- 

ways’ shuttle was accepted as a 
"turn up and fly" service. 

- Competition on the route be- 
tween London City Airport and 
Paris is likely to be intense. 
Brymon Airways, which is man- 
agement owned with a 40 per 
stake held by British Airways, 
will be competing with Eurocity 
Express, owned by British Mid- 
land Airways. 

Both airlines will be using the 
de Havilland Dash 7 aircraft, 
with about 46 seats. Brymon is 
to offer six flights a day and Eu- 
rocity four flights. 

• Air France has an agreement 
with Brymon for it to use the Air 
France terminal at Charles de 
Gaulle, with each airline shar- 
ing costs and revenues. 

Mr Bernard Morel, general 
manager of Air France for 
Great Britain and Ireland, said 
the total journey time between 
the City and toe centre of Parte 
could be about two hours and 20 

Union digs in for long 
fight at Royal Opera 


toe Royal Opera House is to 
hold an emergency meeting to- 
day to discuss the fa tore of the 
company In the light of a pay 
dispute involving 69 members 
of the choruswhich has cost the 
company £1.25m in lost box-of- 
fice bookings. 

The move comes amid signs 
that Equity, toe actor's union 
representing the chorus is brac- 
ing itself for a long fight The 
union, which claims that the 68 
are not on strike but simply ref- 
using to accept new contracts, 
said yesterday that it would be 
appealing as from next Monday 
to all its members to contribute 
to a special hardship fund in 
support of the chorus. 

Equity said that the members 
of toe chorus would return to 
work this weekend if manage- 
ment agreed to accept arbitra- 
tion. But ROH indicated yester- 
day that it still believed such a 
move would not serve any use- 
fid purpose. "As far as tfae.boaid 
is concerned there is no more 
money available'', the ROH said 

The pay offer involves a basic 
rise of 4 per cent plus an addi- 
tional supplementary payment 
iof £4 a wees, bringing toe maxi- 

mum pay to £188.80 . BOH cl 
res members want parity wi 
their counterparts at tbe 1 
gtish National Opera who es 
a minimum rate of £180 a weel 
The ROH said that while t 
board today might consider 
revision involving increased 
lowances, it was not raising 
basic offer of 4 per cent II » 
that any farther increase wot 
rmk upsetting 1,000 other e 

FiSf 8 / 110 **** already s 
tied for 4 per cent. It would a] 
“ d «5™e what it described 
its "perilous finances" as a ■ 
suit or a cut in fends from I 
Arts Council. 

Equity yesterday accused t 

for is comparable money i 
comparable work, wlr j 
talking about toe leading one 
[house in the country and’ 
would expect the managem* 
fe P^y number I money fin 
inumber I chorus'. 

The two-week dispute has 1 

Jj thS postponenu 

the opening of the new » 

so far hi 

deluded Falstaff, La Bohec 

l S?nh^ ree P erfM: ’nances 

including a 
.scheduled for Monday^ . 


Financial Times Friday September 18 1987 


Delegates express merger doubts 

LIBERAL uncertainties about 
the proposed merger with the 
SDP surfaced repeatedly during 
an emotional debate* which 
ended with a resounding major- 
ity in favour of a motion setting 
oat the party's starting point for 
merger talks. 

The mood of the 2 J A-bour de- 
bate was summed up by Us Mag- 
gie Clay, of the Association of 
Liberal Councillors, who told 
delegates: This party has estab- 
lished that it wants merger. "But 
many of us will fight and fight if 
we feel in any way that we are 
being sold down the river, that 
Liberal principles are being 
sacrificed or that anything but a 
‘ground-up* democratic party Is 
going to emerge;" 

The main reservation among 
speakers in the debate was that 
statements of policy might be 
built in to the foundations of the 
new party. Delegates applauded 
several of those who argued 
that the party should be built on 
principles - policy determina- 
tion should be left to its mem- 

Mr Des Wilson, the party pres- 
ident, suggested that the solu- 
tion might be to adopt the 1887 
Alliance election manifesto as 
"the starting point for argent 
and radical policy development 
by the new party." 

Delegates approved by uug 
votes to 21, with nine absten- 
tions, a 4<S-word motion setting 
out the "key constitutional fea- 
tures' of the new party - one 
member, one vote, national 
membership lists, a leader 

Reports by 
Pictures by 

elected by all members, a feder- 
al structure, representative as- 
semblies, a constituency basis 
of association and the right of 
special interest groups to form 
autonomous associations. 

The motion seeks full consul- 
tation across the country and in- 
structs the national executive to 
set up a negotiating team con- 
sisting of the party leader or his 
nominee, the party chairman or 
president ana eight members to 
be elected by the assembly to- 
day. The Scottish and Welsh 
parties will be entitled to send 
one or two representatives 

Opening the debate, Mr Tim 
Clement-Jones, the party chair- 
man, said the talks were an "his- 
toric chance" to reunite the lib- 
eral and Social Democratic 
traditions in British politics 
which had divided between the 
Liberal and Labour parties af- 
ter the First World War. . 

But the most enthusiastic ova- 
tions of the day, highlighting 
doubts in the ■"■»>«»« of many, 
were for an emotional speech 
by Sir Russell Johnston, the MP 
for Inverness, Nairn and Locha- 
ber, who sounded a lament for 
the end of the Liberal Party, 
and an anti-merger speech by 
Ms Claire Brooks (Skipton), who 
warned against giving too much 
power to the new party's leader- 

Sir Russell, the pro-merger 
leader of the Scottish Liberal 
Parly, said there should be 
'some, grief with the joy" over 
the move towards the new party- 
He told the negotiators they had 
a duty to get the merger terms 
right To lose the spirit of Liber- 
alism would be to lose 'every- 
thing we have worked for, so 
hard, so long and in the face of 
so much criticism." 

Ms Brooks said: "Don’t let any 
policy pact be a part of the foun- 
ding of this new parly." She 
feared the use of such a device 

to harass unilateralists within 
the party and voiced concern 
over statements by Mr David 
Steel, the Liberal leader, that 
he favours some aspects of the 
SDP constitution-Thelr consti- 
tution is oligarchic, centralist, 
authoritarian, deliberately de- 
signed to preserve power in the 
hands of an elite." 

Mr Wilson supported the 
proposition that the new party 
should be built on principle, be- 
cause _ policies had to change 
with time and circumstances - 
for example, he had accepted a 
commitment on nuclear de- 
fence in the 1987 manifes to 
which might not be valid by the 
time of the next general elec- 

However, he argued that the 
fears of some SDP members on 
policy questions must be ad- 
dressed by Liberals and sug- 
gested that the 1987 election 
manifesto, which Liberals had 
fought on only a few months ago, 
should still be acceptable to 

The assembly decided not to 
carry out a ballot of En glish 
members on the principle of 
merger after delegates argued 
that it would delay the negotia- 
tions and that a decisive confer- 
ence vote was enough to organ- 
ise the talks. 

Delegate in 
over gun 

Divergent factions manoeuvre 
for position in merger talks 

THE TIGHT security at the as- 
sembly was highlighted by a 
delegate who said police had 
warned him his life would be "in 
grave danger” if he flourished a 
toy gun without warning. . 

Mr Paul Simple, or the Young 
Liberals, produced a 99p model 
of a Mauser automatic pistol, 
bought in a toy shop at Banbury, 

He said the toy had caused 
such concern at the entry to tbe 
conference hall that it had tak- 
en fciwi jmif an hour to get in, 
with the warning from a police 
chief inspector ringing in his 

Industry strategy ‘like failed 1960s ideas 9 

A MOTION on Liberal industri- 
al strategy was only narrowly 
passed by tbe assembly yester- 
day after being attacked as out-' 
dated, against Liberal, tradi- 
tions and like a 'dish. of. cold 

The motion - .which repeated 
ideas set out in the party's gen- 
eral election manifesto • 
pledged Liberals to a 'positive 
industrial policy” with govern- 
ment acting in partnership with 
industry and unions. It was 
passed by 437 votes to 412. 

The 51-tine motion called for 
an industrial strategy Cabinet 
committee and for laws to force 
companies to declare research 
and development spending in 
annual reports. Other ideas in- 
cluded financial incentives for 
training schemes, the setting up 
of regional development agen- 
cies and an enlarged Office of 
Fair Trading to enforce a strict 
competition policy. 

Mr Richard Holme, a member 
of the party’s policy committee. 

said the motion demonstrated 
that Liberals understood the 
needs of industry. 

"We seek a strategy arrived at 
by consultation. We seek practi- 
cal help from practical men. We 
seek in the economy a5 a whole 
what we seek within each firm," 
he said. . . 

He attacked the Government 
for failing to create a true 
framework for competition' and 
criticised the sale of state mo- 
nopolies tike British Telecom. 
These, he said, raised money for 
the Government but did nothing 
to help wealth creation. 

He said that although official 
figures published on Wednes- 
day showed manufacturing out- 
put was now higher than in 1979, 
it was still below the level of 
1974. This reinforced the need 
echoed by the Confederation of 
British Industry for an industri- 
al strategy. 

But Mr Trevor Jones (West 
Dorset) said the motion includ- 
ed ideas too like the foiled in- 

dustrial policies of the 1960s 
which would be outdated in any 
merged party. 

"This mish-mash has no place 
in a new party for the 1990s,* he 
said. Liberals traditionally ar- 
gued the importance of individ- 
uals in the economy. 

"You cannot solve Britain’s 
problems by setting np another 
Cabinet committee under a dif- 
ferent minister to the one. 
It is the British people who will 
solve the economic malaise of 
Britain, not the Government" 
.He called for greater empha- 
sis on a entrepreneurial culture 
- "hot another dose of.l960s'Wil- 
sonian economic mismanage- 
ment” • 

The policy set out in the mo- 
tion was, he said, "a 20-year-old ; 
dish of cold porridge." 

Some support, however, was 
given by Lord Ezra, former 
chairman of the National Coal 
Board. He argued for establish-! 
meat of a -'competitive frame-' 

work* followed by steps to re- 
generate industry. This would 
include increased investment 
more joint public and private 
sector ventures, expanded 
training and an enhanced civil 
research effort 

Mr Matthew Taylor, MP for 
Truitt admitted the motion con- 
tained only a collection of ideas 
and little vision. But he said 
Liberal policy on the economy 
was in the early stages of devel- 

He said it offered the chance 
to apply grassroots Liberalism 
to an industrial strategy. 

"We need to concentrate on 
policy that allows local busi- 
ness to develop and create per- 
manent local jobs," he said. 

During a debate on the Hun- 
ger-ford fciiiingR, he carefully 
produced tbe toy with its wrap- 
ping and told conference it had 
been sold as unsuitable for chil- 
dren under five. T don’t believe 
it is suitable for a child of any 
age. It epitomises a society 
which glorifies killing .* 

Mr Simple also produced a 
magazine called Air Gunner, 
featuring on its cover a teenag- 
er with a rifle, dressed in a com- 
bat jacket and a Bambo-style 
headband. "It is a disgrace that 
a few weeks after the killings in 
Hungerford a magazine such as 
this, which glorifies this sort of 
character, should be on sale.” 

He argued that everyone car- 
ried some blame for the Hun- 
gerford tragedy, because people 
had tolerated the "brutalisa- 
tion” of their society fay allowing 
the sale of violent and porno- 
graphic material. . 

The assembly carried a mo- 
tion urging tbe Government to 
press ahead with its promised 
review of gun law, including an 
assessment of whether ammuni- 
tion or semi-automatic rifles 
should be allowed in private* 

AFTER the debates, the battle 
of the negotiations has now 
started. Liberal delegates. -will 
today elect members of the ne- 
gotiating team, while on Mon- 
day the SDP*s national commit- 
tee will choose its side. 

In both cases there is consid- 
erable manoeuvring for posi- 
tion among internal factions. 
Some of the internal Liberal ar- 
gument has been subsumed into 
canvassing for the rival slates: 

From the establishment side 
there are former presidents and 
close allies of Mr David Steel 
such as Mr Richard Holme and 
Mr Alan Watson and Mr David 
Hughes from the association of 
parliamentary candidates. 

The tribanes of the grassroots 
are likely to include former MP 
Hr Michael Meadowcroft, retir- 
ing party president Mr Des Wil- 
son (presumably in his role as 
outsider rather than insider) 
and Ms Maggie Clay, organising 
secretary of the Association of 
Liberal Councillors. There are 
also candidates backed by the 
Women’s Liberal Federation 
and the Young Liberals. 

The ALC- backed candidates 
are arguing that no decisions 
should be taken on the policy of 
the new party until after it has 
been set up. This contrasts with 
the view of both Mr Steel and 
Mr Robert Maciezwan, the SDP 
leader, that a joint declaration 
on a policy stance should be is- 
sued before a merger vote. This 
is a confusing area in which 
subtle nuances take on an exag- 
gerated significance. 

Given the size of the probable 
negotiating team - not for off 30 
in total from both sides - there 
will be representatives of all 

The SDPs problems are dif- 
ferent The anti-merger group 
led by Dr David Owen has so for 
had a majority on the national 
committee. Dr Owen has said he 
will not obstruct the negotia- 

SS the pro-merger group re- 
mains suspicious about whether 
thin policy will prevail in prac- 
tice, notably among some of Dr 
Owen’s more enthusiastic al- 

CaUn before the merger storm? David Steel at work on a sp e e ch on Ms 
hotel room balcony in Harrogate 

lies. The balance of the national 
committee may have shifted. A 
number of people who voted in 

the complex battle 

last month’s ballot for "option 
one* (closer links with the Lib- 
erals foiling short' of merger) 
now back the 1 talks, including 
Mr Maclennan himself and Dr- 
Dickson Mabon, as well as for- 
mer MP Mr Ian Wrigglesworth. 
Some opponents, such as SDP 
whip Mr John Cartwright will 
not attend Monday’s meeting. 

Mrs Shirley william*, the SDP 
president has made it known 
that if there is any threat of ob- 
struction she will appeal over 
the heads of the anti-merger 
group to localpariy.activists. 

In a speech on Wednesday 
evening. Mr Bill Rodgers said: 
"it would be indefensible for 
any Social Democrat to seek to 
impede behind closed doors a 
process of negotiations openly 

The SDP negotiating team is 
likely to include Mrs Williams, 
Mr Wrigglesworth, Dr Mabon, 
possibly Mr Rodgers and local 
council, regional and special 
Scottish and Welsh representa- 

There is still uncertainty 
about how the teams will be led. 
Mr Steel is hardly a details man 
and talked on Tuesday about 
putting those involved in a lock- 
ed .room. By contrast, Mr Ma- 
clennan, the architect of the 
SDP constitution, prides him- 
self on such nitty-gritty and sees 
himself as a guardian of the 
SOP’S integrity in the talks. 

The danger is- that if the talks 
run into trouble Mr Steel will 
be a one-man court of appeal 
when that should be the role of 
both leaders. 

Michael Cassell on the career of Lord Tordoff 

Backroom peer to the fore 

GEOFF TORDOFF can hardly 
be included among tbe ranks of 
open-toed, woolly-hatted, 
badge-bearing Liberals who 
lend a certain piquancy- to their 
party’s annual assembly. 

Neither does Lord Tordoff; 
the party’s Chief Whip in the 
Upper House, fit tbe caricature 
of an aging, tweeded Liberal 
peer. He will be 59 next month, 
and is used to people assuming 
that his relative youth implies 
his peerage must be hereditary, 
which it is not 1 am afraid it is 
the automatic conclusion if yon 
are under 70." 

Bnt he is acutely conscious of 
tbe rich mix of personalities 
which makes up his party and is 
concerned to ensure tiiat any 
political machine which 
emerges from the Liberal-SDP 
negotiations always has room 
for its eccentrics. "They are part 
of its character, its charm and 
its strength. Whatever lies 
ahead, they have a role to play* 

• This week, the former chemist 
whose allegiance to liberalism 
was sealed by Jo . Grimond’s 
stand against the Suez invasion, 
played a pivotal role in the 
merger debate. On Tuesday, he. 
chaired the key session on the 
need for a new party and then 
worked late into the night to 
help produce the motion which 
went before delegates yester- 

Though he was criticised for 
his handling of the few anti- 
merger! tes. Lord Tordofs calm 
countenance and self-deprecat- 
ing humour helped set the tone 
for a realistic, well-measured, 
debate. He believes the whole 
week has helped prove that the 
liberal Party has "grown up." 

"We have become much more 
experienced, largely because 
we now have so many people in 
local government and the party 
has. this week shown itself to be 
extremely .self-restrained. Ev- 
eryone realises that a great deal 
is at stake," he says. 

A Mancunian who spent 30 
years in a marketing role with 
Shell Chemicals, Geoff Tordoff 
as he is known by delegates, has 
been in the Lords since 198L He 
was in feet the last Liberal to be 
included in a list of working 
peers and the Prime Ministers 
refusal to add any more to his 
hard-working team is a soorce 
of considerable annoyance to 

Be admits that his entry to the 
Lords was, fa a sense, the 'sec- 
ond prize" fa politics,' having 
fought three times for a teat in 
the Commons. In 1966 his agent 
was none other than Tony 
Greaves, now a leading Liberal 
activist and professional thorn 

•f t 


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Lord .Tordoff Rwos up to Mb tHto of "tooridfigpeMv” 

fa the flesh of the party hierar- 

Ever since the early 1960s,. 
Tordoff has been involved in 
the party organisation, first at 
regional and then national lev- 
el He was- chaizman- of the as- 
sembly committee in the last 
year of Jeremy Thorpe’s leader- 
ship, a role he repeated under 
David Steel 

In 1976, he became party 
chairman, a post he held for a 
three-year period which em- 
braced the Lib-Lab pact He has 
.no regrets about that arrange- 
ment - "we learned a great deal 
about government and showed 
the country we had a positive 
contribution to make* -and says 
he would not be opposed tore-’ 
peating tbe exercise in times of 
national crisis. 

Lord Tordoff was also chair- 
man of the party’s campaign 
committee in 1979 and 1983, act- 
ing as a troubleshooter and pro- 
viding a link between the lead- 
er and the party. Perhaps his 
greatest strength lies in his 
ability to feel accurately the 

pulse of tiie part?, something j 
which has rarely been more im- 1 
portent than now. 

He is sure the merger will 
happen, -though the going over 
the next few months will not-be 
easy. He expects- an -acceptable 
compromise over just how for 
policy issues should be pursued 
this side of a merger bnt accepts 
that matters like defence and 
the desire for a federal struc- 
ture for the new party will 
cause a certain amnnnt of an- 

Bathe is anxious that the new 
party turns outwards to the pub- 
lic as soon as possible. "We can- 
not waste time in getting across 
a fresh identity to the elector- 
ate. There is a revolution going 
on, which promises to be much, 
much more exciting than we ev- 
er dared hope. 

"The question is whether the 
two parties have the ability to 1 
work together and pull off! 
something which has a chance 
of changing tbe shape of British 
politics. 1 think they have and 1 
think we Will." 

Spycatcher reading goes silent 

JVE BBC television' coverage' 
>f the conference was interrupt- 
tdwhen Mr Paul Nicholls (Nor- 
rich North) began to read an 
extract from Spycatcher, fae 
took by Mr Peter Wright, the 
ormer security service officer. 

Mr Nicholls had earlier chat, 
enged the BBC fa a letter fa ig- 
tore the Law Lords’ decision 
tpholding the Government’s in- 
unction against publication' of 

excerpts from the boot "It will 
be a sad act of political censor- 
ship extending an already Im- 
pressive injunction still farther 
In its scope to silence tbe broad- 
cast of a debate of a major dent- 1 
ocratic political party." 

However, as Hr Nicholls, 
holding aloft a copy of the book, 
read aloud an extract from page 
368, the BBC cut sound trans- 
mission on its broadcast to keep 

within the terms of the injunc- 

Hr Nicholls told delegates 
that allegations about the activ- 
ities of some intelligence offi- 
cers fa the 1970s were a legiti - 1 
mate matter for political' 1 

A motion calling for the Gov- 
ernment to withdraw its fajnnc-' 
tion was carried with only two 
votes against 






Financial Times Friday September 18 1987 

City agrees 
sale of 
market to 

By Paul Chee8ertyht,Propefty 

THE CITY of London Corpora' 
tton opened the way for a £500m 
urban redevelopment scheme 

when it agreed to sell the ll- 
acre site of the historic Spital- 
fields market to a consortium 
led by London and Edinburgh 

Neither the City nor the con* 
so ilium yesterday would spec! 
<y the price until the contracts 
are signed. The sale depends on 
the approval of the fal 1 City 
council aud the agreement of 
Parliament to move the market 
to a site bought by the consort 
Hum at Temple Mills, three 
miles away. 

The Spitalfields fruit and veg- 
etable market, although owned 
by the City Corporation, is in 
the borough of Tower Hamlets 
and was recently the site cho- 
sen by Prince Charles to call for 
a crusade to rescue deprived in- 
ner city areas. 

Redevelopment of Spltal- 
fieids and the construction of 
the new market at Temple Mills, 
which will cost £24m, could both 
start in early 1989, provide the 
bill to relocate the market gains 
Royal Assent 
Three groups had tendered 
for the purchase of Spitalfields: 

• The winner, SpitalTields De- 
velopment Group, which com- 
prises London and Edinburgh 
Trust, Balfour Beatty and Coun- 
ty and District Properties, with 
London and Metropolitan as 
project manager. 

• Rose ha ugh Stanhope, which 
is developing Broadjgate, the 
massive office complex at near- 
by Liverpool Street station. 

• Spitai fields Regeneration 
Project, a group of architects 
and consultants put together by 
Priests Marian Holdings and re- 
cently joined by Sir Robert 
McAipine, the construction 

Spitalfields Development 
Group for three years has con- 
sistently made the running on 
the project It had hoped a year 
ago to persuade the City Corpo- 
ration into a negotiated sale. It 
had the distinct commercial ad- 
vantage over its rivals that R 
had accumulated sites along 
Bishopsgate which gave the 
market site a direct opening to 
the City of London. 

The development package 
Spitalfields Development 
Group has agreed with the Tow- 
er Hamlets planners covers 
1.75m sq ft of space, of which 
810,000 sq ft is office accommo- 
dation. The rest is a mixture of 
housing, shopping, industrial 
units, a fashion centre, commu- 
nity centre and law centre. 

This is a compromise, which 
has been controversial locally, 
between the desire of the plan- 
ners for more housing and the 
need of the developers for as 
large an office content as possi- 
ble to ensure the financial prof- 
itability of the project At one 
stage Spitalfields Development 
Group had proposed 1.27m sq ft 
of offices. 

The consortium claims that 
Che borough’s income from 
rates will rise from £250,000 to 
£X 0 m a year as a result of the 
develop ment 

Air traffic 
disrupted as 
computer fails 

By Michael Donne, Aeroepaco 

AIR TRAFFIC into and out of 
London's Heathrow and Ga- 
twick Airports was disrupted 
for several hours yesterday 
when software for the main 
computer at the West Drayton 
air traffic control centre be- 
came unserviceable during the 
traffic peak. 

Some inbound flights were di- 
verted to near Continental air- 
ports and outbound traffic was 
delayed. Air traffic controllers 
reverted to manual control. 

Computer control was re- 
stored by about 8 am but there 
were delays for some time as 
the backlog of flights was 

The engineers only the previ- 
ous day called off a work-to-rule 
dispute with the Civil Aviation 
Authority over pay and condi- 

The CAA denied that the com- 
puter failure had anything to do 
with the dispute with the engi- 
neers. However, it agrees that 
some of the West Drayton 
equipment is ageing and liable 
to faults. 

Replacement of the main 
West Drayton computer is part 
of a £200m programme now un- 
der way to improve air traffie 
control equipment 

Grants to local 
authorities to 
be streamlined 


A STREAMLINED system of 
paying the annual government 
grant to local authorities will be 
introduced when the communi- 
ty charge, the so-called poll tax, 
comes into force, Mr Michael 
Howard, Local Government 
Minister, told the Association of 
District Councils conference 

This was being done so that 
those paying the charge would 
be able to receive a simplified 
annual rate demand giving 
them foil details of any over- 
spending by their authority. 

Mr Howard said: 1 believe 
that accountability is the key to 
any reform of local government 
finance. The first priority must 
be to restore the link between 
those who vote in local elec-' 
tions, those who use the local 
services and those who pay for 
those services.' 

Mr Howard will soon publish 
simplified proposals for provid- 
ing government grants to local 
authorities. He said these 
would make community charge 
bills easier to understand and 
make veiy dear the relation- 
ship between council spending 
and the amount levied by a lo- 
cal authority. 

The bills would spell out ex- 
actly what people should pay if 
authorities spent at the level 
the Government considered ap- 
propriate. They would show the 
total cost of local-authority ser- 
vices, the amount of grant going 
to an area, its share of the busi- 

increase its spending on repair 
and maintenance of council 
homes by 9J8 per cent next 
year, writes Andrew Taylor. It 
wants local authorities to in- 
crease its share of spending by 
a similar amount, equivalent 
to a £ 1 . 60 -a-week increase in 

The spending proposals for 
1988-89 were announced yes- 
terday in two consultation pa- 
pers published by Mr Nicholas 
Ridley, Environment Secre- 
tary, and Mr Fetor Walker, 
Welsh Secretary. 

ness rate and the amount of the 
community charge. 

This means that everyone 
will see what is really going on 
in the finances of their local au- 
thorities,* said Mr Howard. "In 
that way local authorities will 
be folly accountable to their 

The green paper on poll tax 
proposals for England and 
Wales suggested the Govern- 
ment should pay a standard 
grant, of a fixed amount per 
adult, to local authorities, and a 
needs grant, to compensate 
them for variations in spending. 

Mr Howard said the Govern- 
ment had now decided to have a 
single grant, called the revenue 
support grant This would sim- 
plify explanation to communi- 
ty-charge payers and clarify ac- 

Merger discussed by two 
more City solicitors 


DURRANT HESSE, solicitor, 
yesterday confirmed it was dis- 
cussing a merger with Lovell 
White & King. Talks have gone 
on for several months. A deal 
may have the consent of part- 
ners from both City firm* by the 
month’s end. 

Dorrant Piesse, formed by 
merger in the early 1970s, has 
grown fast in the past few years. 
It has 32 partners and specialist 
legal divisions in hanking, fi- 
nancial services and litigation, 
as well as property and com- 
mercial divisions. It was the 
first British firm of solicitors to 
open a branch in China. 

Lovell White & King has 68 
partners. It ranks at the lower 
end of the City's top 10 firms. Its 

interest in Durrani Piesse Is 
probably in adding banking and 
financial expertise to its range 
of legal services. 

A growing trend to mergers of 
City solicitors emerged after 
Clifford Chance was formed 
from file union of Clifford Turn- 
er and Coward Chance this 

Deregulation of financial ser- 
vices was a factor causing solic- 
itors to search to see how they 
could satisfy demand for ser- 
vices. At the same time the City 
is increasingly demanding high- 
ly-spectalist legal expertise. 

The position is complicated 
by the shortage, emerging in the 
past three years, of good gradu- 
ates entering the profession. 


By Paul CbeessrigM, Property 

tightened its policy against the 
construction of large shopping 
centres outside urban areas. 

It sent a draft circular to local 
authorities reiterating its stand 
that such centres have no place 
in green belts and stressing that 
they are not acceptable in the 
open countryside 
The draft circular said excep- 
tions may be made if shopping 
centres are planned outside ur- 
ban areas where they reclaim 
derelict land and where they 
will have diffuse impact on ex- 
isting shopping centres. "Such 
cases are likely to be few,* it 

An example of such a devel- 
opment is Cameron H all's He- 
troCentre at Gateshead, Tyne- 

The Environment Department 
is inviting comments on the 
draft circular by November 20. 
The submissions will then be 
considered and a definitive cir- 
cular sent to local authorities. 

This would provide the basis 
of the policy which local author- 
ities would be required to apply 
when considering planning ap- 
plications for out-oftown shop- 
ping developments. 

The Governments move is in- 
tended to clarify what many lo- 
cal authority planners, con- 
fronted with a rash of planning 
applications, had seen as a 
messy policy- Government plan- 
ning policy is geared towards 
economic development but it 
has constraints on environmen- 
tal grounds. 

If the draft becomes defini- 
tive it is likely to thwart plans 
put forward by Individual de- 
velopers for a series of shop- 
ping centres along the M25 Lon- 
don orbital motorway. 

Yesterday Prudential Corpo- 
ration started an information 
campaign to win support for one 
such plan at Hewitts Farm, near 
Orpington, Kent 
In another aspect of its retail 
planning policy, the Govern- 
ment seeks in the draft circular 
to weld shopping developments 
into its effort to promote urban 

The modernisation and refhr- 
bishment of town centres, espe- 
cially where this involves the 
use of derelict land, is welcome, 
the draft circular said, but 
there was an implicit warning 
to local authorities not to stifle 
new developments 
The draft circular says; "Only 
in the case of very large devel- 
opments, or where several ma- 
jor developments are being con- 
sidered concurrently, are file 
effects likely to be so substan- 
tial as to raise serious questions 
about the foture of nearby town 

Unemployment total falls to 2.8m 


BRITAIN’S official unemploy- 
ment total, seasonally adjusted 
and excluding school-leavers, 
fell by 43^00 in August to stand 
at 2(833,000, the Employment 
Department said yesterday: 

That took the decline in the 
past year to 376,000, which the 
department said, was the lar- 
gest on record. The total has 
been falling- consistently since 
June 1986, and government stat-. 
isticians showed the latest 
monthly decline is close To the 
underlying trend. 

The official jobless total, how- 
ever, is still around L?m higher 
than when the Conservatives 
took office in 1979. That in- 
crease is considerably more if 
changes in the compilation of 
statistics and the expansion of 
special job measures are taken 
into account 

The improving trend in the La- 
bour market has been fairly 
evenly spread between regions 
in the last year, with only Scot- 
land and Northern Ireland re- 
cording falls in their jobless 
rates of less than one percent- 
age point The biggest gains 
have been made in the West 
Midlands and in the south-west 

Large regional disparities re- 
main, however, with an unem- 


ry-, A.uoust 
£'r> 1937 




t-fS l'worft Waat 


■jQ 1 * YSrta > Hwdbw TfrS&ftgpa 



. Iv.i Liil 

ai l south WMt 

ployment rate of 14.1 per cent in 
the north of England compared 
with a rate of 7.2 per cent in the 
south-east. In spite of the fall in 
the past year, the West Mid- 
lands still has a jobless rate of 
1L3 per cent against a national 
average of 102 per cent 
Separate figures for employ- 
ment show a suprising drop of 
17,000 in the number of jobs in 

mannfWnrtng in July. Officials 

believe, however, that the fig- 

ure is erratic and point out that 
if the latest three months are 
taken together employment in 
manufacturing was stable. That 
compares with an average 
monthly fall of 4.000 in the pre- 
vious three months . 

Surging manufacturing output 
in the last few months has been 
reflected in strong gains in pro- 
ductivity, which in turn have 
offset some of the impact of 
buoyant e arn in g s on unit costs. 

In the year to Jutyoofputper 
head in manufacturing was up 
by 7.2 per cent During the same 
period, average earnings rose 
by an underlying &25 per cent, 
upfront the rate of 7.75rpei>cent 
at the start of this year. 

There are, however, signs that 
the pace of growth in unit costs 
has accelerated. In April, for 
example, wages and salaries 
per unit of output in manufac- 
turing were fractionally below 
the level of a year earlier while 
in the 12 months to July there 
was an increase of L7 per cent 

The department’s unadjusted 
unemployment total showed a 
fall of 41,000 during August to 
2(868j)0a That figure, however, 
excludes 115,670 school-leavers 
who are not yet allowed to claim 

The impact of the special job 
schemes in reducing the unem- 
ployment total is reflected in a 

65.000 increase over the last 
year in the numbers of the 
Youth Training Scheme to 

380.000 and in an 18,400 rise in 
those on adult schemes to 

No figures are available for 
the impact of the Restart pro- 
gramme on long-term unem- 

Invisible earnings offset trade imbalance 


A WIDENING gap in Britain’s 
trade in manufactured and oth- 
er goods in the first half of 1987 
was offset by a farther rise in its 
earnings from its overseas as- 
sets, financial services, tourism 
and shipping. 

The Trade and Industry De- 
partment said yesterday it had 
revised upwards its estimate of 
the surplus on trade in such 
so-called invisibles doling the 

first six months of the year to 
£4bn, from the £3.4bn published 
earlier Uus month. 

It emphasised that the figures 
were still tentative, but on the 
basis of the latest information it 
appeared that the overall cur- 

rent account during the same 
period showed a small surplus 
of £4B8m against previous esti- 
mates of a £90m deficit 

The latest statistics, however, 
do show a marked deterioration 
in Britain's external position 
between the first and second 
quarters. A visible trade deficit 
of £L13bn between January and 
Match more than doubled over 
the next three months to 
£2.38bn. That deterioration ap- 
pears to have continued in re- 
cent months. 

That meant that while the cur- 
rent account was in surplus for 
the first half of the year as a 

whole, there was 'a deficit of 
£174m in the second quarter. 

Mir Nigel Lawson, the Chans 
eellor, said yesterday that the 
current-account deficit for the 
whole of 1987 was now expected 
to be below the £2.5bn shortfall 
he had forecast in his March 

The continuing improvement 
in the invisibles balance re- 
flected a marked increase in 
earnings from s er vi ces , particu- 
larly those in the financial sec- 
tor, and a substantial rise in the 
net surplus on overseas invest- 

•In separate figures released 
yesterday, the department said 

that capital spending by manu- 
facturing industry, measured in 
1960 prices, rose by more than 
14 per cent to £L9bn in the 
three months to June compared 
with the previous three months: 
That left it 10 per cent higher 
than a year earlier. 

.The rise provides evidence 
that industry is responding to 
the upturn in demand by invest- 
ing more in plant and machin- 
ery. That follows a prolonged 
period in which investment has 
been flat, and the volume of 
capital spending is still sub- 
stantially below the levels seen 
in 1979. 

Dollar stability accord is Lawson priority 


BRITAIN'S priorities at this 
month's international meetings 
in Washington will be to secure 
a reaffirmation of February’s 
Louvre currency accord and to 
increase aid to the poorest Afri- 
can nations. Hr Nigel Lawson, 
the Chancellor, said yesterday. 

Briefing journalists ahead ot 
the annual meetings of the In- 
ternational Monetary Fund and 
the World Bank, Mr Lawson 
said he was confident that Feb- 
ruary's agreement by industrial 
countries to stabilise the dollar 
would remain in glace. 

He rejected suggestions that 

recent pressure on the dollar as 
a result of a renewed rise in the 
US trade deficit would force the 
Group of Seven leading indus- 
trial nations to alter their infor- 
mal target ranges for the princi- 
pal currencies. The exchange 
rates of those currencies were 
very little different from those 
at the time of the last IMF meet- 
ing in April, -so I see no reason 
to move the goalposts at air, he 

Mr Lawson said governments 
hati fulfilled their commitments 
under February’s agreement 
and he expected no important 

initiative at this month's talks. 
He was concerned, however, 
that the prospective reduction 
in the US Budget deficit this 
year should be repeated in 1888. 

The pace of growth in West 
Germany, meanwhile, was still 
“very disappointing*, and it was 
important that the Bonn govern- 
ment should continue to press 
ahead with its tax- refor m pro- 

The Chancellor said be was 
determined to push on with his 
debt relief plan for the poorest 
countries or sub-Saharan Afri- 
ca, In spite of opposition to as- 

pects of the proposals from 
some other Western govern- 

The plan, which involves tran- 
slating some existing official 
loans into grants, extending the 
maturity of other loans and set- 
ting concessional interests, was 
essential to prevent the debt 
burden on many countries from 
rising to intolerable levels. 

Britain would also support 
proposals for a large increase 
in the IMF’s structural adjust- 
ment facility, which provides 
concession financing to the poo- 
rest countries. 

Max Wilkinson continues a series with an analysis of a sensitive sector of the energy industry 

Political risks of putting nuclear power into private hands 

NOW FOR the really big one: 
“As a result of the Government’s 
most daring privatisation offer 
yet, you can become part owner 
of Britain's newest nuclear 
power station. 

“Yon will receive no dividend 
for 10 years, but if all goes well, 
you or your family could reap 
steady profits well into the next 
century. The yield on your In- 
vestment over 35 years could be 
as high as 7 per cent after infla- 
tion, even though shareholders 
will eventually have to pay for 

ri|'cman(ling * 

The idea of such an advertise- 
ment is by no means fancifal al- 
though the Government’s plans 

envisage selling off Individual 
nuclear reactors. 

Even so, any prospectus for 
tiie sale of the electricity indus- 
try would require investors to 
take a view on its nuclear sec- 
tor, which produces 16 per cent 
of Britain's electricity, and 
ght produce a fifth by the 

There is do reason why nucle- 
ar stations should not be moved 
to the private sector, provided 
that the independent Nuclear 
Installations Inspectorate re- 
mains in charge of the all-im- 
portant safety regulations. 

However, after the disaster at 
Chernobyl in the spring of 1966, 
the Government must be won- 
dering whether the public 
would be happy with the idea of 
putting unclear power into pri- 
vate hands. 

The majority of this power 
still comes from elderly Magnox 
Stations, a first generation gas- 
cooled reactor. The eight sta- 
tions south of Scotland, with a 

combined capacity of 3£Gw (1 
Gigawatt* 1,000 Mw) will gradu- 
ally be phased out over the next 
15 years. Since they are cheap 
to run the only question for a 
potential investor is how long 
the safety inspectors would al- 
low them to keep going. An ex- 
tra five years' life could yield a 
total benefit of about £L5bn, 
two and a halftimes the indus- 
try’s aftertax profit for last 

The judgment of safety ex- 
perts having such a large poten- 
tial impact on the industry's 
profits is bound to focus inves- 
tors’ attention on the plans for 
new investment In nuclear 
plant, particularity in view ol 
the continuing problems in 
commissioning the latest of the 
advanced gas-cooled reactors at 
Dnngeness B, Hartlepool and 
Heysham L 

Largely because of these com- 
missioning problems, the Cen- 
tral Electricity Generating 
Board is building its first Pres- 

surised Water Reactor at Sizew- 
ell in Suffolk. This is based on 
an extensively modified licence 
from Westlnghouse of the US. 

The experience of Electric! te 
de France shows that FWRs of 
this type can be built on time 
and commissioned rapidly. 

However, the British nudear 
industry has yet to prove it can 
emulate the performance in 
France, where 44 nuclear sta- 
tions are producing about 70 
per cent of domestic electricity 
needs as well as an increasing 
volume of cheap exports. 

France’s consumers have 
been told that nuclear power 
will enable electricity tariff} to 
be reduced by 1 per cent a year 
in real terms until the end of 
the century. 

In three to four years’ time, 
when British electricity is ex- 
pected to be packaged for sale, 
the GEGB's performance in 
building its first PWR may be 
clearer. Shareholders - or their 
board - will then have to decide 

Whether to allow the GEGB’s 
Successor to proceed with its 
plan for about five stations 
starting with the second at 
Hinkley Point on the banks of 
the Severn in the eariy 1990s. 

This will be a decision of stra- 
tegic importance, particularly 

in view of the Government’s 
strong commitment to nuclear 

For investors, however, the 
main focus will be the high cap- 
ital cost - about £L6bn for Si- 
zewefl- the long payback period 
and the inevitable uncertain- 
ties of a new design. 

In his exhaustive report on 
the Sizewell project. Sir Frank 
Layfield, the planning inspec- 
tor, judged that it would pro- 
duce a worthwhile saving in 
electricity costs over its life- 
time compared with an equiva- 
lent coal-fired station but Oils 
view was based on the assump- 
tion that the cost of capital 
would be 5 per cent a year in 
real terms, and that Interna- 
tional coal prices would rise. 

Any investor who thought his 
capital should earn, say, 10 per 
cent would probably prefer a 
coal-fired station at half to two- 
thirds of the price. 

From an economic point of 
view, therefore, it makes little 

difference whether new nuclear 
reactors were offered for sale 
individually or as part of a lar- 
ger generating company. In ei- 
ther case the private sector In- 
vestor whoold have to decide 
whether to forgo earnings on 
the capital cost for perhaps a 
decade or more in the hope of a 
longer-term benefit 

In view of the big political 
risks of nuclear power, the pri- 
vate sector would probably 
want to see a better track re- 
cord than the UK nuclear indus- 
try can provide so far. 

In the face of this uncertainty, 
the Government has three op- 

The first would be to keep nu- 
clear power in the public sec- 
tor. The second would be to 
frame regulations to allow elec- 
tricity companies to pass on 
some of the capital costs of nu- 
clear stations to consumers via 
electricity prices, during the 
building phase. The third would 
be special subsidies or favours- 

Rolls-Royce consortium to inspect Sizewell reactor 

ROLLS-ROYCE says it Is to in- 
spect the Sizewell B nuclear 
reactor daring construction 
for the Central Electricity 
Generating Beard, under a 
contract worth between £5m 

and £lOna, writes David Fish- 

The contract has gone to 
Rolls-Royce and Associates, 
the defence consortium led by 
Rolls-Royce that builds pres- 
surised water reactors far the 

Royal Navy. 

The consortium will provide 
the GEGB with the same kind 
of inspection service as it gives 
the navy as part of its 'cradle- 
to-grave’ service for the uncle- 
ar submarine fleet It Is com- 
missioning a new pressurised 
water reactor, prototype of the 
reactor for the Trident subma- 
rines, at the Naval Reactor 
Test Establishment, Doonreay. 

The consortium has orders 

to supply die reactors tor the 
first two Trident submarines. 

Rolls-Royce and Asso ciate s 
has built more than 20 PWRs 
for the navy under a technical 
agreement with Westinghonse 
and the US Navy. 

The consortium, which in- 
cludes Babcock Intern ati o nal, 
Foster Wheeler and Tickers 
Shipbuilding and Engineer- 
will derail 

for the 

Sizewell B pressure vessel, 
which is much bigger thin Na- 
vy reactors. 

It will Inspect the vessel he* 
fore It leaves the production 
line at Framatome in France, 
and again when the CEGB has 
installed it at Sizewell in Suf- 
folk. its contract runs until 
1993, when the reactor is 
scheduled to produce power. 

Mr David Dawson, managing 
director of Rolls-Royce and As- 

sociates, said the company 
would be applying expertise 
gained fin the navy in the civil 
nuclear power programme. 

He also disclosed a second 
msewell B contract, far the de- 
sign. procurement and opera- 
tion of a ’harsh environment* 
test facility at Derby to simn- 
late the conditions that might 
•rise in a reactor compartment 
in a serious strident 

ble tax treatment of nuclear 

These ideas would all weaken 
the effects of a free market in 
electricity. A state-owned nu- 
clear company would dominate 
t he in dustry's capital plans. No 
private sector company would 
dare build a coal-fired plant in 
direct competition, because 
whatever it cost to build, the nu- 
clear plant would have much 
lower marginal costs and would 
be run in preference to a coal 
station at off-peak times. 

Any arrangement which al- 
lowed the preferential recovery 
of nuclear capital costs, would 
be difficult to devise and would 
run counter to the hope that pri- 
vatisation will make the indus- 
try more responsive to wider 
economic forces. That leaves 
subsidies, which would be the 
mart open way of promoting a 
political priority, but would not 
be popular with the Govern- 

In spite of these difficulties, jt 
would be a mistake to believe 
that private sector electricity 
companies are inevitably anti- 
pathetic to nuclear power. 

Privately-owned utilities In 
Japan have ambitious nuclear 
plans. Even in the US, where no 
nuclear plant has been pro- 
ceeded with since 1973, most ex- 
isting reactors were built and 
operated by the private sector. 
Many observers believe that 
when the economics of power 
generation swings back in fa. 
roar of nuclear power, US utili- 
ties will start ordering again. 

iJSStJ&EZ , *® ctor could 

prove to be keenly interested In 

a ‘gaBftai**— 


60 ! 


Financial Times Friday September 18 1987 


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g3 Confidence has 

■Li SZjI returned to the UK 
bhI QJ) market for office 

■ ™5 i Property in many parts 
Ml § of the country, led by 
an upsurge in central London rents 

and demand from the financial 

services sector in particular.New 
types of premises are becoming 
available in response to the search 
for cleaner, greener environments 
and changes in planning rules. Paul 
Cheeserigfit reports. 

The chase 
for space 


X v-W- -- ' 

. .tfcw.r-'V 

through the different Layers of 
the national oQlce property 
market as growing demand has 
pushed rents higher and as 
over-supply, outside London has 
been taken lip. 

But the market itself is chang- 
ing as the demands of tenants 
become more exacting. Accom- 
modation costs generally have 
continued to increase and there 
is a growing insistence among 
occupiers oo value for money. . 

At the same time, new types of 
premises are becoming avail- 
able From the growth of busi- 
ness parks as a response to a 
search for cleaner and greener 
environments and from changes 
to the Use Classes Order, which, 
under planning legislation, 
specifies the use to which build- 
ings may be put 

But the feet remains that the 
market can be split into central 
London and the rest of the coun- 
try. The greater part of institu- 
tional investment in offices is 
concentrated on London and it 
is in the' centre that the most 
dramatic deals have been 
■struck and developments un- 

The mainspring has been the 

growth of the financial services 
industry which has created de- 
mand both from the players in 
the game, and those who support 
them - the lawyers, accountants 
and so on. 

This growth, however, has 
spread out into the regions as 
the financial institutions have 
set up new branches and moved 
their back offices out of Lon- 
don. . . 

Even in the fevered atmo- 
sphere or central London 
though,, the development mar- 
ket has at least three strata. An 
apparently insatiable demand 
for space has sent potential oc- 
cupiers chasing a still limited 
supply of new buildings coming 
on to the market, so that the 
presetting of large new. prem- 
ises has almost become a norm. 

The planning authorities - 
move so in the City of London 
than Westminster - have re- 
sponded to the demand by 
granting p lanning consents 
which, if they are followed 
through, could result in a better 
equilibrium between space sup- 
ply and demand by the early 

. A massive expansion of space 
is taking place in the City itself. 

. • =V TfStf / v • : • ...... • *V’. $. >.** •••• ? •*.*■! : 

racked House, home of the Fteandal Times for the past 27 years, which baa just been sold to Ohbayaslil of Japan forJUASm. 

Office Property 

And its boundaries are being 
pushed out as offices 'sprout 
south of the River Thames and 
in London Docklands, where 
the Canary Wharf project is now 
assured by the arrival of Olym- 
pia & York and where new de- 
velopments in the Royal Docks 
are only just over the horizon. 

It is at this stage that the 
three strata become apparent 
The chase for space by poten- 
tial occupiers has sent develop- 
ers scurrying to buy sites so that 
they can meet it land values 
have been chased upwards. 

The highest stratum is rarif- 

ied, occupied only by Japanese 
companies who have seemed 
prepared to pay almost any 
price for the site they want 
Ohbayashi, with its purchase of 
Bracken House, the Financial 
Times Building, for £143 ul, fits 
into this category. It is signifi- 
cant that the underbidder was 
willing only to pay less than 

The second and middle stra- 
tum is occupied, again, by Japa- 
nese companies but also by for- 
eign banks, as owner occupiers, 
who are prepared to pay very 
high prices to obtain the build- 

ings and sites they require. 

They would tend to work with- 
in the same financial frame- 
work as British developers - 
they would do the same sort of 
sums on the economics of a 
project - but they would apply 
different criteria. That is, what 
looks expensive in London may 
well appear to be cheap by Tok- 
yo standards. 

The third stratum is filled 
largely with British developers, 
forced now to compete with for- 
eign interests bnt having at the 
same time to keep a wary eye on 
their balance sheets. They 

would be the victims a down- 
turn in the market- a heavy debt 
burden to service and an unlet 
expensive building is some- 
thing they would devoutly wish 
to avoid. 

Operators in all three strata 
have been helped by the ready 
availability of finance A dis- 
tinct characteristic of the mar- 
ket has been the readiness of 
the international banking com- 
munity to put up short to medi- 
um term money to cover devel- 
opment costs, in a growing array 
of sophisticated instruments. 

The greater part of the devel- 

Ctty of London: developers go 
into overdrive to meet the demands 

of overseas groups 

West End/Suburbs: traditional 
tenants remain the lifeblood of the 


opment taking place, outside 
the owner occupier sector, is in 
the hands of property invest- 
ment companies. But the prop- 
erly investing institutions have 
also remained in the market for 

the buildings put up by develop- 

Indeed, the proportion by 
capital value of City of London 
offices in the average institu- 
tional office property portfolio 
increased to 35JB per cent by the 
end of last year from 25.3 per 
cent in 1980, according to analy- 
sis by the Investment Property 

Only 15 per cent of institution- 
al office investment is outside 
the South East and this is one 
foctor behind the relatively 
sluggish office development 
mnrfe<»t over the rest of the 
country. Bnt this could change. 
There Is some evidence that in- 
vestment interest is creeping 

Hitherto fears that it would 
be difficult to sell on specula- 
tive office developments has 
held back speculative ventures, 
especially against a background 
of relatively low rents. 

But strengthening demand 
and the absorption of over-sup- 
ply, which in some centres had 
been shrouding the market, has 
been pushing up rentals, open- 
ing up the possibility of higher 
returns to developers and 
hence the possibility of new 

In the areas around London 
rents have been rising quickly 
as companies have eschewed 
the expense of the centre and 
have been more willing to look 
at peripheral locations. Al- 
though areas like the Thames 
Valley have always been popu- 
lar. the office growth, aided by 
better roads communications, 
has begun to move eastwards 
and southwards, towards the HI 
and Bill corridors and towards 

Elsewhere in the country, ex- 
tra demand has frequently 
xome from companies seeking 
-larger premises rather than 
from the arrival of new compa- 
nies. Such indigenous growth 
has itself been a response to 
movements in the economy at 

But it has also been a re- 
sponse to the changing needs of 
tenants. A recent report by 
Healey and Baker, surveyors, 
on the basis of a survey of office 
tenants, significantly showed 
that in the south 61 per cent of 
tenants would pay more for bet- 
ter designed accommodation If 
they could find it In the Mid- 
lands 57 per cent would pay 

Development, Design and 
Construction: Quality and speed 
now the order of the day 
Provincial contra s: good quality 
space becomes scarce again 3 

The occupiers: Demands lor 
greater flexibility and better 
environments grows 4 

more and in the North 42 per 

Implicit in the results of this 
survey is a challenge to the of- 
fice developers and a warning 
that it may not be much use in 

the fiiture putting up any old 
building and assuming that it 
will be leased, provided it is in 
a convenient location. 

It is noteworthy that in Glas- 
gow, for example, that the office 
market has not strengthened as 
much as it might have done be- 
cause companies are tending to 
stay put: there simply have not 
been the new high standard de- 
velopments available for them 
to move into. 

Facilities, design and conve- 
nience may become as impor- 
tant as being in a traditionally 
prestigious location. Behind 
this is a growing consciousness 
among employers that losses of 
efficiency can be caused by 
so-called building sickness. 

This sickness is a condition of 
physical malaise - headaches, 
runny noses and so on - that are 
present among some occupants 
of a building but which disap- 
pear when they are not in it 

It is an emotive subject But, 
at the end of the day, it is associ- 
ated with the fact that in some 
buildings, the air conditioning 
does not work properly, there is 
a Lack of individual control of 
the immediate environment and 
the physical surroundings are 
perceived to be unfriendly. 

There is then a call for higher 
standards of design and a better 
working environment One re- 
sponse to this need has been the 
expansion of out-of-town busi- 
ness parks and campus offices. 
So far this phenomenon, an ex- 
tension of the US experience, 
bas largely been confined to the 
south and has not spread fur- 
ther north than Birmingham. 

With the greater flexibility 
that the Government bas per- 
mitted in the use of buildings, 
by changing the Use Classes Or- 
der, light industrial and high 
tech buildings can be used for 
offices without the need to ob- 
tain planning permission. It 
seems likely that the parks first 
^p^igwwi for high tech industry 
could become increasingly pop- 
ular office locations. 

AU of this points to a sector 
on the move. But, historically, 
the sector has been notoriously 
cyclical, moving from boom to 
bust and back again. The boom 
now is based on London. Else- 
where the cyclical movement is 
gentler. But there at least a few 
people in the industry wonder- 
ing when the next turning point 
will come. 

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2 v- 


Office space taken by business sectors 

Year ending 30 June 1987 




Company HQ 
Government , 
Technology i 

■ City 
R^West End 

Oil companies 

Thousands Sq.Ft. 0 250 500 750 1000 1250 

Source: Research & information Services Debenham Tewson & Chinrtocks 

West End/Suburbs 

A wave of relocations 

WHILE ALL EYES were con- 
centrating on the epic mystery 
of whether the City would be si- 
phoned into into Docklands, im- 
patient financial groups were 
quietly slipping out in the oppo- 
site direction. Some took a short 
hop, helping to transform the 
no-man's-land of Holbora and 
Fleet Street into another boom 

Goldman Sachs and Morgan 
Guaranty moved into the old- 
newspaper district while the 
sites were still warm. Peat Mar- 
wick and Coopers & Ly brand si- 
dled in nearby and Nikko looks 
set to replace News Interna- 

Rents have soared to £36 a sq 
ft and should hit £45 by the end 
of the decade, according to 
agents Richard Ellis, with sites- 
like Holbom Station and Rob- 
ert Maxwell's Holbom Circus 
set for high powered bids from 
groups still looking for space. 

But the exodus has not 
stopped here. The wave of relo- 
cation has washed as far west as 
Victoria as tenants search des- 
perately For bigger modem 
buildings. And this fervour has 
belped raise the whole West 
End to record rent levels. 

A quarter of all the finance 
and banking lettings in central 
London over the last year were 
in the West End, according to 
Debenham Tewson & Chin- 
nocks. This included a third of 
the big buildings more usually 
associated with City Cringes like 

Broadgate and London Bridge 

Only a couple of years ago, 
Salomon Brothers shocked the 
market by taking Greycoat's 
200.000 sq ft over Victoria Sta- 
tion, breaking the pattern of lo- 
cating near the City. Now banks 
are dotted all along unlikely lo- 
cations like Victoria Street and 
The Strand. 

Salomon's £19 a sq ft is 
looking increasingly cheap as 
First Bank of Boston and Nikko 
Securities have agreed rents 
upto 32,50 a sq ft for two build- 
ings totalling 125,000 sq ft on 
Victoria Street 

Cynics still believe these 
banks will move back into the 
City as space comes free. But of 
the eight groups that have 
moved in during the last year, 
only two are building alterna- 
tive homes elsewhere, accord- 
ing to Jones Lang Wootton. 

Salomon certainly seems set 
to expand in Victoria, as it looks 
for 125,000 sq ft out towards the 
M25 to relocate its Mortgage 

Bat for all the financial pyro- 
technics, traditional tenants re- 
main the West End's lifeblood, 
taking up something like 80 per 
cent of the space let this year. 
The booming economy rather 
than the Big Bang have boosted 
their fortunes, pushing rents in 
Mayfair and St James’ up by 
about a third in 1987 to more 
than £45 a sq ft for small suites 
and over £30 for larger 

Rapid rent rises are pushing 
companies out farther to find 
new space says JLW. This has in 
turn raised values in places like 
Kensington, where the £1850 
paid by the Daily Mail for Bark- 
ers store last year is already at 
least £2^0 below the going rate. 

West London has become an 
extension of the growth axis 
from the City through the West 
End and out as far as the 1125 
and Heathrow. It will not be 
long before the £20 rent barrier 
is broken, as Son Alliance has 
already let 86,000 sq ft to Cadbu- 
ry Schweppes,, in Uxbridge for 
£19 a sq ft and Kodak has taken 
a 53,000 sq ft refurbished block 
in Hammersmith for £17 a sq ft. 

In fact, the healthy London 
economy is improving demand 
right across the capital, with 
many suburban centres like 
Croydon, Harrow and Bromley 
seeing their first rent hikes for- 
some time as the final vestiges 
of surplus office space disap- 

pe<u * David Lawson 

. In the fast 3 monthsive r i^let3d&fl0d sqfl.of office Space: 

Prr6perty : X)ir^^ 

‘MfeVe acquired freeh old investments i tithe City West $ndf&rXZ3nuZf 

Our clients arc 

Commercial properties of. alt types. hi cyces$- of £200m invest 


74 ( nuwnnr Sum. Linim tt'(A 4X1 

01-491 2768 

Financial Times Friday September 18 1987 


Design and development 

US methods speed construction 


giants Olympia and 


space.The pre letting in King 
Street of 30,000 sq. ft to Inch- 
cape at £41 a sq ft reflects the 
same tendency of tenants to get 
in while they see space free. 
The situation can only get tigh- 
ter, according to Richard Ellis, 
which sees C5 m sq ft in de- 
mand over the next 18 months 
but less than 2m. sq. ft available 
today and another L4m. sq. ft. 
coming on stream next year. 

Wharf project in - Londons 
Docklands from its original 
banker backers on 17 July, the 
uncertainties which accompany 
major changes of this kind soon 
gave way to a measure of relief 
The Canadian company, owned 
by the three Reichmann 
brothers, has a reputation for 
soundness and for 'delivering* 
which bodes well for a develop- 
ment which earlier this year 
was beginning to look doubtful. 

■We never make promises we 
cannot keep and we do not take 
on projects unless we are sure 
we can do them well and on 
time", Paul Reichmann said on 
the morning of the day the mas- 
ter building agreement was fi- 
nally signed. He went on to say 
that O & Y would probably com- 
plete Canary Wharf in 5-7 years, 
rather than the 10-15 year peri- 
od previously envisaged. Cer- 
tainly O St Y*s track record indi- 
cates their capacity to do this; 
they have several management 
and background advantages as 
well. Firstly, the brothers began 
as importers of supplies to the 
building industry, and indeed 
one of them still runs that side 
of the business. This gives them 
an important understanding of 
the construction side of devel- 
opment which others lack. 

Being a private company run 
by very private men, they also 
rely first and foremost oh an 

.?• • 



in-house team, headed by proj- 
ect manager Michael Dennis 
and Ron Sosklone, who is in 
charge of (be architectural side. 

OScTs approach to architec- 
ture is guided by past experi- 
ence of dating and early obso- 
lescence of the innovative 
designs of yesteryear. American 
Ware Travelstead, whose idea 
Canary Wharf was, wanted to 
create a 'showcase of the best in 
the architecture of the late 
1980s*. To this end he planned to 
commission the top names in 
world architecture to create in- 

S?S^SS. toSl0tiD The Broadgate project wfiere A 

The Reichmanns also believe solely for the aesthetics of the 

V ^ 


The Broadgate project where American* fort track" bofldng methods have been responsible for an 

speed of construction. 

in architectural quality, as project, while other can speed was aided by early pre-ordering sq ft shopping centre built in 23 
much for pride as for profit. But matters through the working and off-site pre-fabrication of months - at least nine months 

as they retain overall manage- drawing , contract document components, 'so that once the 
ment responsibilities for their and constriction phases. contractor arrives on site, he -tional contracting procedures. 1 

properties, other consider- Happily, Britain will not have can work as quickly as possi- 

ations most be taken into ae- to wait for O & Y to arrive and ble." 

count According to Ron Sos- demonstrate faster construction “Two or even three-shift work- 

trading requirements. Speed meron Hall, this meant a 1.5m shell of a building and is re- 
was aided by early pre-ordering sq ft shopping centre built in 23 sponsible for the fitting out 
and off-site pre-faori cation of months - at least nine months This too is a fresh challenge to 
components, 'so that once the less that if we had used tradi-Lthe UK industry, he says. 



■There is no doubt that early project may cost £2m - but the 
contractor participation could tenant’s fitting out contract 

key to 

ect's could cost £3m or more. The 
lain- shift in emphasis of responsibil- 
tfan- ities is obvious, and so is the re- 

count According to Ron Sos- demonstrate faster construction “Two or even three-shift work- well be the key to any project's could cost £3m or more. The 
koine, O & Y are looking for methods. A Reading University ing is also usually necessary*, success”, agrees Derek Ham- shift in emphasis of responsibil- 
buildings which can be leased - study in 1979 found that UK Kolesar says, 'and the client mond, chairman of Project Kan- flies is obvious, and so is the re- 
and maintained - for decades to projects took an average 78 per - will probably end up paying agement International. “But the sponsibility of the Industry to 
come For this, the design must cent longer to build than Ameri- more in wages - but the project . contractor must be assured that minimise confusion. The devel- 
be timeless’ and flexible, can counterparts - but since overall will be cheaper and information flow will continue oper’s contract must provide for 

Long-term considerations are then much has changed. ’Fast ready to let earlier”. Fast track- to meet technical on-site re- early access for the tenant’s fit- 

also behind greater use of ex- track* building methods from ing, especially with penalties quirements throughout - and ting-out contractors. The deal 

pensive but hard-wearing mate- across the Atlantic have been . for late completion, concen- that is the responsibility of the established between developer 

rials like marble and copper. taken on board by tbe industry bates the mind wonderfully, _as independent project manager”, and tenant must reflect current 

rials like marble and copper. 

and tenant must reflect current 

u & is lavounte way or and nave already accounted tor Ken Fanon, regional director or Hammond also notes mat an- market conditions ana the over- 
achieving the quality of design the astonishing speed of con- Rush & Tompkins, readily ad- other American method 11 which all project manager may well 

they require is by holding limit- struction projects like Broad- mils. "When working on the is rapidly becoming popular, es~ hold tbe key to ensuring that 

ed competitions. Participants, gate. £i50m Metrocentre in Gatesh- pecially on major projects in benefits at all times outweigh 

which include -young practices The •principle is to bring the ead, we had .to adopt a flexible the Gfty of London, fa 'shell and the inconveniences.' * 
which are talent spotted* by the contractor on. site early, well approach throughout the con- oore"cOnstmctioii.In this in- Mim 

company, get between two and before design work is complete, tract period. For the client. Ca- stance; the client takes over the . ' WMra paM1WBr , 

eight weeks and between to advise on ’build ability 7 . The 
$10,000 and $20,000 to produce project teams then works to- 
designs - but not fancy models gether, with much less of the 
and drawings. traditional inter-professional 

It was just such a competition infighting, and the building pro- 
which yielded the Cesar Pelli gramme is based on tbe logic of, 
designs for Manhattan’s World the development rather than on 
Trade Centre: Pelli had im- traditional, sequential lines, 
pressed Ron Soskolne with his According to Simon Kolesar , 
work on a competition in Los of quantity surveyors, E C Har- 
Angeles in 1980. ris, the stimulus to adopt faster 

Having selected an inspired building methods came from I 
winning design, O & Y find that American financial houses,; 
time and trouble are saved if seeking early occupation for 
the winner is then responsible their post-Big Bang London 





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•'-T- :ea& ' 

t:«: 2a .Tr. 

‘iff « £ 

- i - c. sa j 
i-f cxjjoiia- 
‘Jc LOS;.. 

: ^rjseaac 
".nt’.in Tas 
."2ir. j^?r c3? 

Bristoraattrectivcriy redeveloped docklands: tho cHy I 
Vm Jm&s wqdu of apnea bant In Om last boom. 

The provinces 

in demand 

TT HAS BEEN a long, hard slog 
for Britain's leading provincial 
centres over the last five years 
as they have climbed painfully 
out of a pit dog by overdevelop- 
ment and slow business growth: 
Most arer now over the worst, 
however. and rents are drifting 
upwards as good space becomes' 
scarce again. . . 

Development la under way in 
centres such as Bi rmingham, 
Manchester, Glasgow and Sou- 
thampton,: while Bristol and 
Reading; have shad the huge 
surplus of space built in the last 
botun.: 5 

Finding an institutional in- 
vestor to Look seriously at a pro- 
vincial scheme can still be diffi- 
cult, however. The problems 
are not so much. with local econ- 
omies, which are often so bustl- 
ing that tenants are - having 
problems finding prime space. 
The attractions of the London 
region are; Just too powerful to 
Justify the train fare. 

That, may change where de- 
mand overtakes supply. In Bris- 
tol, for instance, demand has 
risen for three yeans while de-. 
velopment has slumped. Howev- 
ei\Hartnell Taylor Cook say in- 
vestors have broken their two 
year embargo now that rents 
have reached £9. to £ 10 a sq ft 
and yields are foiling. 

This is one of the few centres 
still attractive to companies re- 
locating from . the southeast 
Lloyds is the latest arrival, with 
plans for a 200,000 sq ft head- 
quarters on Canons Marsh. Oth- 
ers could be in the pipeline as 
London prepares tor another 
round of departures. 

But, like other centres, Bris- 
tol will be hard 'pressed to. pro- 
vide high quality space. Only 
400,000 sq ft is available, and 
much of already under 
negotiation.Tlie formula is also 

right' for' hew development in 
Birmingham, where Chesshire 
Gibson say all space will be 
used up this year and the £10 
mark will be breached by the 
next generation of buildings. 

Pre-lets will be the order of 
the day, as new schemes will not 
be ready for two years. 

Many centres are paying the 
price, of earlier booms, with a 
backlog of obsolete space that 
will have to be refurbished to 
meet pew demands. Local pro- 
fessionals who make up the 
bulk of demand for provincial 
offices have raised their stan- 
dards, and it is sometimes the 
lack of good buildings which is 
hoi ding back rents. 

In Leeds rents have reached 
£7.25 a sq ft but a developer 
brave enough to invest in raised 
floors ana air conditioning 
could command £9 according to 

The same affliction holds 
back* Glasgow, even though 
rents have grown from £7.50 to 
£&50 a sq ft in a year. Richard 
EUis believes it could achieve 
£32 with the right sort of top 
quality space. 

The picture is the same al- 
most everywhere outside the 
southeast. Institutional inves- 
tors are less interested in prop- 
erty in general, but when they 
dip in their fingers it tends to 
be in London or the growth cen- 
tresaround the M25. 

The provinces tend to be left 
to local developers serving lo- 
cal buriness-The locals should 
not complain too much. Rents 
are set on a rising trend as 
space disappears, and as long 
as the biggons keep out there is 
lesscbmice of another big surge 
o fb vers n pply to. hang around 
like .'an albatross [during the 

next downtwiLp,^ 


for further information contact 
our Auction Personnel. 




8,000-20,000 SQ. FT. 

Please contact 

E. Lesley on 935 2811 



City of London 

Trouble down the pipeline 

MONSIEUR PATRON can- could not look more rosy, Rents cent of the new space' would be split easily if big tenants do 

this summer. 

The owner of one of the City’s 
premier lunch clubs risked ir- 
revocable marital breakdown 
and a gastronomic shock as the 
Loire was scratched in favour of 
a working trip to Tokyo. 

But the dangers seemed un- 
avoidable He had haxtUy fin- 
ished rewriting his menus after 
last year's working holiday 
trawling around Wall Street's 
watering holes, when the word 
came through that it was not 
American bankers but the Japa- 
nese who would be elbowing 
out his pinstriped City regulars. 
Eyes had already been turning 
east to identity Big Bang invad- 
ers as companies like Kumagai 
Gumi began to snap up the best 
sites. Ohbayashi brought outsid- 
ers into the picture when head- 
lines blasted out the £143m it 
paid for the FTs Bracken 
House close to St Paul's. 

The illustrious restaurateur 
can be excused his excitement 
He is only reflecting the mood 
of his City customers who seem 
to expect miracles from the 
newcomers. Developers have 
gone into overdrive to create a 
massive potential supply of of- 
fice space over the next five 
yearsjnainly to teed the inter- 
national financial groups. 

But is their optimism justi- 
fied? On the surface, the picture 

couple of years to average £52 a 
sq ft for larger buildings and 
touch £60 for small suites. The 
financial groups have soaked 
up 2m sq ft in the last year and 
have reserved just about every- 
thing else coining out of the 

But some doubters fear that 
trouble could be around the 
comer. Almost 22m sq ft of new 
City offices is in the pipeline, 
representing about 40 per cent 
of all the existing stock. Piled 
on that will be the 18m sq ft pro- 
posed for Docklands, as Canary 
Wharf can no longer be ignored 
now that Olympia & York has 
put its financial muscle behind 
the scheme. 

Questions are being raised 
whether this is too much for the 
City to swallow as demand fodes 
following the Big Bang surge. 
Supply and demand will come 
into some sort of balance by the 
end of the decade and whispers 
of a crash reminiscent of the 
1970s are sending shudders 
around the market, particularly 
as interest rates seem so vola- 

But gross supply figures can 
be misleading. Baker Harris 
Saunders and- County Bank 
went to a great deal of trouble 
recently to show that funding 
was secure, partly because the 
huge shadow of new supply is 
not all it seem&Almost 60 per 

rather, than add to the stock, ac- 
cording to their research. 

Displaced tenants would also 
take almost 13nusq ft as re- 
placement premises. A mere 2 
per cent .increase in demand 
'per year j&r five years would 
soak up tberest of the space. 

Agents fike Richard Ellis, 
which forecast the rent boom a 
few years ago in the face o f 
some scepticism axe. just as san- 
guine, relying on a feel for the 
market as well as research. But 
they still preach cantion. 

Roger Lister, gesturing vague- 
lythrough the windows of RE’S 
offices high above the City, ad- 
mits: ’Some agents out there 
need to be carefoL They don’t 
r ememb er what a bear market 
was like They would be shock- 
ed to have to drag lots of poten- 
tial tenants around their build- 
ings. Vj 

Short memories indeed, con- 
sidering the recently dark days 
of the early 1980s. But Lister 
himself sees no sign of demand 
abating, with take-up at least 
matching last year’s 4.6m sq ft. 
Prelecting is still the norm, he 
says, as tenants plan tneir 
needs up to five years in ad- 
vance, so the projected balance 
of supply and demand could be 
pushed back further.But he still 
advises developers against put- 
ting up the old fashioned deep 
space buildings which cannot 

Many will go even farther and 
refuse to start building until 
they have a prelet according to 
Jones Lang Woottoo^nother 
leading City agent Blocks set 
for demolition can be kept in 
business while tenants are 
producing rents. 

In fact,some schemes which 
swell potential supply figures 
are doubtfal because they still 
have tenants. Owners may face 
more trouble than they suggest 
in getting around the leases so 
they can redevelop. 

All these caveats should ease 
the fear of a flood of empty 
space engulfing the City in the 
3990s. Much of it will simply not 
be built because there are not 
p otential tenants 
Geoff Marsh, head of research 
group; APR, points oat that 140 
buildings of more than 100,000 
sq ft are planned for the next 
five years. Yet there are only 
250 companies in the whole of 
London with the sort of staff 
numbers to fill such space. 

Surprisingly, it is the biggest 
buildings which have least to 
Fear. Up to 30 companies could 
be in the market for up to 
500,000 sq ft each in the next 
five years, he says. The smaller 
ones will rely on Tattle Bangs’ 
the reorganisation -of profes- 
sional groups like solicitors in- 
to bigger firms. APR has identi- 
fied at least 15 law businesses 

which need major new prem- 

But everything will still de- 
pend on the health of the core 
financial markets, so each blip 
in interest rates or withdrawal 
of a securities dealer from the 
fray raises pulses.The 
Americans and Japanese are 
certainly a new driving force for 
which Monsieur Patron should 
adjust his menu. But he would 
do well to keep the steak and 
kidney podding on the back 
burner as well. David Lawson 

Rede ve lo pm ent by the Mansion 
House: no less than 140 
bufkRngs of more than 100,000 

are planned In the CHy over the 
next five years. Questions are 
being raised whether this Is too 
much for the City to swallow 


$ * 

M -4 

44 t f 

No ordinary office could set the pace 
in the heart of Liverpool. 

. At English Estates we seek 
opportunities where others see only, 

So in 1984 we began transform- 
ing the disused Exchange Station 
Hotel in Iiverpool into 200,000 sqft 
of the most modem office accomm- 
odation in England 

State of features include 
computer controlled heating and 
lighting and electronic security 
systems allowing 24-hour access. 

This adds up to a high quality 

but flexible package which meets 
the needs of the most discerning 

The results of this policy speak 
for themselves. Since Mercury Court 
was completedin late 1986, over half 
of the property has been let and the 
remainder will soon be taken up. 

Mercury Court's success can be 
measured in other ways too. The 
restoration of the original neo- 
classical facade and the provision of 
a new landscaped square have 

brought a breath of fresh air to the 
surrounding area. 

There are signs too that the 
project has given a new lease of life 
to Liverpool's commercial centre and 
encouraged others to invest in office 

Mercury Court is only one of 
over 650 developments managed by 
English Estates, all of which are help- 
ing the private sector to generate 
economic activity and create jobs in 
areas where they are needed most, 


The Developing Agency 

Eqgfch Estate*, St George's House, Kingsway, Team Valley, Gateshead, Tyne ft Wear NE11 ONATfeL (091) 487 8941 


Financial Times Friday September 18 1987 


The occupiers 

The right space in the right place 

THE OFFICE market in London 
and the south east of England is 
booming. Record take up levels, 
fuelled by unprecedented de- 
mand in the post Big Bang era, 
are resulting in shortages of ac- 
commodation in roost sectors. 

New development and refur- 
bishment has reached an ex- 
traordinary rate as developers 
desperately struggle to catch up 
with the market 

The dramatic increases in of- 
fice rents which have resulted 
from the shortage of space and 
the continued growth of other 
occupation costs have done lifc- 
tie to cool the ardour of occupi- 
ers for more and more space 
and commentators report that 
for most large occupiers rent is 
a minor consideration. 

Rents of £60 asq ft pins are 
rumoured to be achievable in 
the best locations in the City of 
London, rents in prime West 
End stand at £45 a sq (l and in 
Victoria £32-f35 a sq ft is the 

In favoured business loca- 
tions elsewhere in the south 
east rents of £ll-£29 per sq ft 
are paid for new space in prime 

According to a recent report 
from agents Richard Ellis total 
occupation costs in the City are 
now estimated to be around £75 
a sq ft, and in the London's West 
End £49.20 a sq ft. 

But, for many companies cur- 
rently seeking office space this 
is the least of their problems. 
Space is in such short supply 
that just getting the right build- 
ing (in terms of specification 
and design) in a location in 
which they can do business is 
more important, says Jones 
Lang Wootton's Michael Dow. 
Companies axe not greatly di- 
verted from their purpose by 
even very large rents, he com- 

Design is an increasingly im- 
portant factor for occupiers. A 
recent survey from Healey & 
Baker showed that 55 per cent 
of office tenants in the UK 
would be willing to pay more for 
a better designed buildings. In 
the south the figure was 61 per 

Out of London rent and occu- 
pation costs are considered af- 
ter design and location along- 
side a number of other factors 
including shopping and leisure 
facilites, communications, envi- 
ronment, availability of young 
labour force and schools. 

Similarly, the financial ser- 
vices sector which is making 
most of the running in central 
London’s busy office market at 


i 1 


*-V ' 1 

Tbo2SO,OOOsq.ft Chelsea Harbour office development: occupiers wW pay whatever te 
r to got the apace they want. 

BOCs awn advanced glass-coating technology ham (wen extensively used hi its pwpose buflt head office >at Wtadfesham tn Saner Aramd 
200 people work In tlte building which ts set in 50 acres 

present is far from rent sensi- 

Urgency has added a further 
dimension to the problems of 
securing the right space in the 
right place as these companies 
seek to set np new operations to 
tap new openings as quickly as 
possible. These three criteria 
have practically overridden all 
cost considerations for compa- 
nies from this sector. 

Other occupiers seem equally 
unperturbed by rental levels. 
Before marketing the 250,000 sq 
ft of offices at Chelsea Harbour, 
Jones Lang Wootton researched 
the impact of rent on the deci- 
sion making process of occupi- 
ers in the design field. 

The agents discovered that, 
within certain bands, the occu- 
piers are willing to pay whatev- 
er is necessary to get the space 
they want in the place they want 

But the current situation may 
not last Some commentators 
warn that occupiers are becom- 
ing increasingly concerned 
about the high costs of their of- 
fice accomodation. 

While rents have escalated, 
other occupation costs have ris- 
en less dramatically. Service 
charges have remained rela- 
tively stable for a number of 
years. Indeed, the proportion of 

total occupation cost taken up 
by service charges has actually 
fallen yet occupiers are already 
aware of the potential savings 
to be made from efficient build- 
ings and their effective manage- 

The success of Jones Lang 
Wootton’s recently established 
Facilities Management depart- 
ment is proof of this trend. In 
contrast to an agents traditional 
role of management for land- 
lords, JLW are now offering a 
management service for tenants 
aimed at minimising costs: 

A number of factors are likely 
to combine to ensure that rent 
becomes afar more important 
factor in the office market of the 
future. Firstly, in central Lon- 
don, the financial world has be- 
came more competitive since 
deregnlation of the City, com- 
missions have been slashed and 
there has already been wit- 
nessed the withdrawal of cer- 
tain operators from specific fi- 
nancial markets. 

Further rationalisation looks 
certain. Under increasing pres- 
sure to perform many financial 
companies will inevitably begin 
to scrutinise their overheads. 
Other sectors will follow. 

The result may be a further 
upheaval in the property world 
as firms seek to reduce their ex- 

penditure on property. The lar- 
gest corporations may seek to 
move their support functions 
out of central London, while 
smaller companies contemplate 
wholesale relocation. 

Secondly, when the new rent- 
al levels work their way through 
to rent reviews, existing occupy 

cy that it is impossible to pre- 
dict the impact they will have 
on office property. It is feared 
that the new system could sig- 
nificantly disrupt the balance 
between office locations and 

Certainly, the City of London 
is concerned about the effect 

given for over 400,000 sq ft of 
space; and Goldman Sachs p 13- 
chase of the former Daily 

Telegraph building on Fleet 
Street, E04, which is to be rede- 
veloped to provide 300,000 sq ft 
plus. _ . _ 

A number of other financial 
occupiers are known to be 
looking for an equity stake in 
new buildings for their own oc- 

Meanwhile, a handful of ma- 
jor companies have decentral- 
ised from Londonto purpose-' 
built owner occupied buildings 
in the the provinces, such as 
Sun Life of Canada which 

era will fore significant hikes in the new level of rates mi g ht . 

moved to a 150,000 sq ft building 
stoke last year and 

their rent bills, prompting a 
number of companies to look 
for less expensive locations or 

This trend may have started 
already. Unconfirmed reports 
suggest, fop-example, that La- 
pqrte Industries' recent deci- 
sion to leave its Hanover House 
headquarters on Oxford Street 
has been prompted by a rent re- 
view. Laporte will move to a re- 
furbished office building on its 
manufacturing site in Luton 
early next year 

The problems of rising rental 
levels and service charges 
could, overshad- 
owed by the forthcoming 
ffhanpM in the rating system. 
Occupiers are viewing with 
trepidation the commercial rate 
revaluation and the introduc- 
tion of the Uniform Business 
rate In April I960. 

So much uncertainty still sur- 
rounds these two aspects of the 
Government’s rate reform poli- 

Why search high and low 



Whatever your interest in office property, from development through to -occupying or investing in 
existing buildings, Debenham Tewson & Chinnocks provide the advice and deal with the problems. 

Advice, however, is only as good as the information it’s based oh- ours is based on some of the 
best research and information available. For example, the following list of regular reports gives 
you an idea of how thoroughly we know the market; 

OFFICE RENT & RATES Annual review of performance and trends in London and provincial centres. 

QUARTERLY FLQORSPACE REPORTS Updated monthly, covering availability and take up in central 

WEST END OFFICES Review of office development and forecasts of supply conditions. 

SOURCES OF DEMAND Structure of demand for London offices. 

So, if you want to know about office property, contact the people who know how to advise you. 
Further information can be obtained from David Steventon at the address below. 


have on its standing as a major 
international financial centre. 
The Cite Corporation is lobby- 
ing the Government for more in- 

Rates on some City buildings 
could more than double, an in- 
crease which could not foil to 
have an impact on occupiers 
who do not need to be in the ar- 

In general, according to Mi- 
chael Capon, a ratings expert at 
Edward Erdman, tenants of of- 
fices that have not been refur- 
bished are likely to see reduced 
rate burdens while modern of- 
fices and good refturbxshments 
may well see increases' 

(hie would expect a period of 
low inflation and high profit- 
ability to engender a trend to- 
wards owner occupation. Bat, in 
spite of strong demand from po- 
tential owner occupiers, the 
lack of opportunities is restrict- 
ing the growth of this market. 

Increasingly owner occupiers 
want more specialist buildings 
than are provided by specula- 
tive developers and as a result 
foe market in the last two years 
has been dominated by demand 
for sites and redevelopment op- 
portunities for purpose built of- 
fices for owner occupation rath- 
er than purchases of existing 
b uilding s. 

A number of major deals have 
been concluded in central Lon- 
don, for example, including 
Morgan Guaranty's decision to 
pay more than £90m for the two 
acre City of London School site 
in EC4 where consent has been 

in Basingstoke 
Chase Manhattan, whose 400,000 
sq ft Bournemouth headquar- 
ters complex is under construc- 

Other companies, particularly 
those which need a manufactur- 
ing base as well as an headquar- 
ters, prefer purpose-built units 
on the new generation of busi- 
ness parks built along the lines 
of those in the US. Nxxdorf, for 
example, has paid over £lm an 
acre for a 15-acre site for its UK 
headquarters on Bride Hall / 
PosTel’s Park One scheme in 

But, occupiers seeking to ac- 
quire sites for purpose-built 
properties have to compete 
with developers. In the past the 
owner occupier often had the 
edge in financial negotiations 
because his calculations did not 
have to take any profit margin 
into account 

In the current market, howev- 
er, developers are taking a bull- 
ish view of rental growth daring 

Often impractical and expen- 
sive, the country house usually 
comes with restrictions on 
where and how partitions can 
be put up and extensions built, 
outmoded beating and ventila- 
tion- In addition they ean be 
miles from anywhere. In spite of 
being many a managing direc- 
tor’s dream, these buildings ac- 
tually have limited appeal as 
headquarters although they do 
tth»v«» ideal training or manage- 
ment centres. 

In general the country house 
only really works as an head- 
quarters if it can form the cen- 
trepiece of a larger 'office cam- 
pus’ type development of new 
buildings, such as Monsanto's 
80,000 sq ft facility in Basings- 
toke (where the house itself pro- 
vides just 12,000 sq ft of execu- 
tive accommodation) which was 
built some years ago. It is, how- 
ever, usually difficult to get 
planning consent for any devel- 
opment In the vicinity of the 

The flip side of the high level 
of demand for long term com- 
mitment to bricks and mortar is 
a growing requirement for 
shorter leases. The flexibility 
and control afforded to occupi- 
ers by five rather than 25 year- 
leases makes them attractive to 
all tenants, but particularly 
tooverseas companies (because 
it suits; their tax system) and 
fledgling businesses. 

Thaw Is also demand for 

short term agreements from oc- 
cupiers which, unable to get 
what they want now, have taken 
one of the increasingly common 
prelets and need to be accom- 
modated until their new build- 
ing is finished. 

Jill North of HHUer Farter's 
Cite office identifies two build- 
ings Winchester Boose, London 
Wall, and Gillette House cm 
BasinghaU Street/vhich are 
currently occupied on short 
leases fry tenants signed np at 
the massive Broadgate scheme 
at Liverpool Street Station. 

Both of these buildings are 
currently the subject of plan- 
ning applications for redevelop- 
ment so the short term let suits 
the landlord as welL. . 

Indeed, it is apparent that a 
number of institutional land- 
lords are begin! ng to appreciate 
the advantages of granting 
shorter leases. Part of a trend 
towards active management; 
shorter leases enable a land- 
lord to revitalise his investment 
rather than having his return 
trail towards of the end of the 
lease. According to David Baker 
of Edward Fwfman, landlords 
are often happy to grant 20-25 
year leases, although, they still 
shy away from the 5 yean or 

less often prefered fry occnpi- 
the Short- 

ers. However, while 
ages of spare prevail landlords 
can continue to offer and let 
properties on standard 25 year 
leases. Linda Welch 

tential owner occupiers are 
qnenfiy outbid. 

Although a number of owner 
occupiers were interested in 
Thorn EMTs former West End 
building, for example, it was 
sold to a developer. John 
Edgcombe of agents miller Par- 
ker points out that none of the 
occupiers were willing to match 
the developer’s bid. 

One route to acquiring a free- 
hold is the 'country house’ type 
headquarters, but this route 
can present difficulties and 
most occupiers prefer modern, 
efficient officespace 





33,^ 8 MINS. 





£1 .45 m POSSESSION 



Pilgrim Milloi* 


Tifney House, 5 Titney Street 121 Albert Street Fleet 
Park Lane. London W1 . Hampshire GUI 3 9RN 

01 - 629-9933 0252 620422 

12,000 Sq. Ft. (approx) 
Modern, Self-contained 
Office Building 

15 St. George Street, 
Hanover Square, 
London Wl. 

^ Full air-conditioning 
Open plan offices 
% Full amenities 



, TgljjX: 2M540 FP MAY G. FAX: 01-491 1961 




Room at the 

International Property Advisers 

Bancroft House, Fttemoster Square, London EC4P 4ET, 01-236 1520 

Whatever ihe size of your business, 
you'll find room to grow in Birmingham. 
Gioose from a superb range of modem 
industrial and commercial properly, with 
more than 350 acres currently under 
development in four new sites alone. 
And with rent and rotes about one-third 

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i fJ ) S ro0f 0ver y i ur head - Without 

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your business 

miajfcw 0r calltlsnwori 


Street Knni^hamW2NA 




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?« Gm^lc 

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. -*£'• 

'Vi . .* 

- »•'!> 

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a*** 1 

financial Times Friday September 18 1987 



has appointed. MrAfcCAfiW- 
qnergUe' as ditectifrof ftnaneA 

He joined Alcwnp' iwTand 

has. been responsible for 
operations’ iff ’Latin Ameripa 

since 198*. He trap* also a vice 
. president and board member of 
Alcan- Alumlnip doHrasiL 

was assistant chief ; 

Hr Jims* MUfen, a . director of 

The McCann. 'Cbnswtimey/ has 

set; up his own financial PR 
business. JAMES SULLEN AS- 

E&S'Bu appointed Mf Robert 

fihrtTw MontanfXoebl Stanley. 
Lloyds Bank Stockholders is a 
wholly-dnmed ‘ 'subsidiary of 

Lloyds Merchant Bank ' Hold- 

Dr Ingram Luton, . former 

chairman QfTDowqier Xhda&~ 
tries, has joined the' board Of 
ppp-exe cntiy a BirectorL ~ 

pointed 25 ©artners and direc- 
tor? in its offices throughout the 
US. Audit:. Hr’ Chris .Agsplctets 
(Bour nemout h}; air John Bcrri- 

man. Hr Nfcfc Parker and Ur An- 
dy Potato (London); Hr Martyn 
Bodd? (Manchester); and Hr Ed 
Smith (Uxbridge! Tax: Mr Lawr- 
ence Niven (Leicester); Mr John 
Gwyer (London); and Hr Nick 
HopUn (Norwich} Manageihent 
consultancy: Hr BUI Bound, Hr 
John Callings, Mr 'Kiehar&Sb 
eiy, Hr Rwsel) Hpir and Hr 
Mike Stanton (strategic services 
division, Lqndbn); Hr Brace 
HucUesby (commercial services 
division, London); " Mr Lynton 


Group com pany, .pas appointed 
Hr Jau-'ffn^m'es' madagiqg dl- 

S ’responsible -for both 
p ’Marine’ Safety, and 
act Air^Sea 'Equipment 
based' in Birice, pltead. HO was 
dBmAb" HUT 'tmSidl manager 
of Dunlop Graphic' products. Mr 
vyilsbb" succeeds MrAndrew 

SURE (RETAIL} Mr Robert Spi- 
got, formerly general manager 
at GrandsuDd, becomes manag- 
ing director, add Mr Brian Wf- 
mot, Calor (finance director, 
Joins Grandstand’^ board. 

. •" '* 1 

Mr Namw Ireland, former fi- 
nance director of BTR, no* 
chairman oF Bo water Industries 

and of London and Metropoli- 
tan, has been appointed a non- 
executive r director of HILL 

(ration, a new role. He joins 
from Pedigree Petfoods. •"’' 

Mr T&GOrrigan ha$ been elect- 
ed non-executive chairman ‘-of 
Chairman of HaVelotk Europe, 
and" of 'Witchimptoh 'Bofcrd- 
mffis. He fr Alsb"a director of 
Bex Stewart &’ Associates, 'and 
chairman of the Post office Us- 
ees' National Council. 

Mr Derek Ktngriwy has be- 
come " chairman at FAJREY 
GROUP in addition to his role 
as group chief executive 

for - * technology ‘ sc 

Mr Richard MCyero has been ap- 
pointed group' finance dirqrtor 
of SKKTCHLEY “abd Joins the 
main- board. He was secretary/ 

tnfaaipec' ' J '' -••••> 

Mr K^N-Tcuudcbro has been at 
pointed group financial cpntro 
jer at TT GROUP. Re joined 1 

national futures' and optioti^ 
brokerslpaling arm of Alexan- 
ders Laing * Cruickshank, has 
appointed Hr Aland Kiegneiro as 
director of the capital' markets' 
division. He was manager of the 
institutional 'financial fotyres 
division OfBache securities. 1 

vision, Manchester): Mr Thomas 
Cuttill (manufacturing and dis- 
tribution, Manchester); and Sir 
Bob M i ll ar (manufacturing divi- 
sion, Uxbridge). Bpgmess ser- 
vices grpug: Hr Jonathan Wick- 
et* (Leeds); Mr lMer Jacobs - 

ett (Leeds); Mr ' Peter Jacobs’ - 
also corporate" finance support 
se r vic M -' (London); ; Mr John 

^ a£ 

drew Mainz (London -legal sup- 
port); and Mr Sydney Bighard- 
san (director of planning). 

Former BICC Citoc sales and 
mdhketfng manager Hr John Tb- 
.many Das been appointed As the 
new managing director of TE- 
LEMAP, the British Telecora/E- 
MAP/Bell Canada owned ' com- 
pany Which operates Hicrooet 
He replaces Sir Tom Baird from 
September 28. Mr "Baird; 'now 
general manager of ttricTocdto- 
pliting products and services in 
BTIS 'spectrum division; will re- 
main <m Telemap’s board. ’ 

' ' ■ ■ 

Hr racholas CJtaul has been ap- 
pointed managing director (des- 

ignate) Of NORGREN MARTO- ! 
NAIR, Quid control subsidiary 
ofXML He tikes over on October 
1 With the retirement 'of Hr 
DJLLXytm. Hr Paul is manag- 
log dfrectbr of ZMI Yorkshire 

.-Mr Simon a director of 

County ’NatWest; has been ap- 
pointed a oo-execntive direc- 
tor of McLaughlin & har- 
VEY.‘ '• 

-•af-c*’ .. 
iV. i’is. 

Mr David Wpeatfcy, head of ex- 
patriate' terms' and conditions 
division at Shell,' ha^ 'been' ap- 

tor or Advisory services at ‘EM- 
ABROAD. He will be' responsi- 
ble for the' 'development of 
EGA's consultancy service. 

ASDArMST Group has seconded i 
BUBdnwil Q.TrajtraiLthe com- 
pany's group • public 'relations I 
controller, to run a hew enter - 1 
prise hgency covering the York- 
shire Dttlea. He is to become di- 1 
rector of ’ the' DALES! 
it officially Opens in November; ! 
The agency primarily wifi be j 
fostering exirangand potential 

maUbasixmsses particularly in i 

Kny*- <f* v . 

y PSgTwnjjl^pn.Tlaf ouB 

nrafiUA} comrotfor 

Mr Gwyn FbDlips )ias been ap- 
pointed financial 1 director of 
DpC fiELG^AVIA in addition to . 
bis role as company 'secretary. • - 

in 193$ as director of xnanage- 
ment information audit and 
since early 1938 has been fir 
nance director of Tf Raleigh! 

■Mr Pat Barrett has been ap- 
pointed' a n on-ex e^utlve direc- 
tor of porter CHAD BURN 
from October L He is a manag- 
in^ director with Russell Reyn- 

Hr Barry Towers bas been ap- 
pointed {Ux^totor 'and general 
manager of BIGGS WALL (NO- 
VATEK). He was director ofEu- 
ropean operations of Gelman. 

Mr Peter Jones, previously man- 
ufacturing' 'director, has been 
appointed director and general 
manager.: of INGERSOLL 
LOpKS, part of the Aldmasc 
r :'" 

LAND bAa appointed Mr'Davld 
BLBatteri^orib as head of crb^R 
control, central ( credit cojitool 
department, London, in succes- 
sion' fo Mr Colin Kramer who' 
has becojnfe head of feroup Hsfo 
managessant Jfr Bntterworfft 

Ifir Davty Suddens has been ap- 
pointed chief ex ecu tive or the 
Clothin g ~‘ffi yisibiT" qT . JOHN 
ber L He was a director of Cour- 
taillds TtextOe Group, and chair- 
man of its fa bric s division. Mr 
Peter Boy? WJoumig'ffie doth- 
ing division as merchandise di- 
rector. He was with William 
Baird firtiup la charge of its Te~ 
lemac ifodraton (imports from 
the Ear Eastt Mr Stephen Lister 
fids jotyed prdwthers as group 
fipartritf ’ cobtrbflec. He was 
gxoui> fibanrial • cpritroller and 
seep^ny- SoC.^^wiil Indus- 
tries. .* ‘ : ‘ . :i ’’ •” ' 

appointed' Mr Peter Hannah 4& 
director headtyg private client 
fiindg management- He was with 
Vajmet Asset ^Lanageiaeht. 

• V“ 

3TUBGE HOLDINGS has inter- 
posed Sturgc Lloyd's Agencies 
between itself and tye "group's 
Lloyd’s npderwriting agency 
bthhpanies. The ' board or the 
new company consists of: Mr 
DX-CbleiUge, Mr“TJ»Hough- 
ten, Mr PJRaw-j. 18 , Mr BJlla- 

5FkEL&gler, Hr%LWjS 

ley. Mr HK&itler, and Mr 

Hr WkaTnMtmg. (flrectorof the 
Dales Enterprise Aflancy 

Mr Dayjfl Mitcbcfi, chief execu- 
tive of ; t||e CgTor Group, has 
been 1 appointed eltairman of 

sports twtafiihg '* subsidiary 

Mr Robert Utonkersley has 
been - Appointed A director o f 
BEVERAGES with responsibili- 
ty for persahhp} anA admrois- 

tourism ans agriculture-related 
industries. Developed from the 
Craven Small Business Associa- 
tion, the new agency will em- 
brace much of the National 
Park area including Ilkley, 
Skipton, Settle and Susden. It 
will operate from offices near 
Skipton which have been do- 
nated by Country Holidays. 


• • ”*r ■''_v ’.W 

! •, I • .,?ry <H:i ^ 

m Sk , 



Synthetic fibres: 

Quality * [dy 
in the finest f 


Swiss tradition 

'-'"m-- ■ - 

EMS synthetic fibres are recognized 
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The Swiss traditionally strive tor per- 
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quality. Our fibres are, therefore, made 
to exacting standards and special types 
have been developed for demanding 
technical applications as diverse as 
paper-making felts, fitters and document 

In the production of textile fabrics, 
yams produced from either 100% Swiss 
polyester Grilene fibres or blends 
of Grilene fibres with natural fibres are 
ideal for weaving on today's high- 
perhrmance looms. 

EMS does not, however, “■ 
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based on our fibres. 




i -mi 

EMS is a name you can trust. 

We are an internationally active Swiss 
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and we guarantee quality, reliability, 
know-how and customer service. 

In Great Britain: 


Astonfields Industrial Estate 
Drummond Road, GB-Stafford ST163EL 
Telephone 0785-59 121, Telex 36 254 
Fax 0785-21 3068 

CH-7013 Domat/Ems, Switzerland 
Telephone 081/3601 T1 
Telex 851400, Fax 081/363816 





UN.1T3 ' 1 . TOTAL 

v - ; Sil S 


■i . a 

In today’s business world, first impressions 


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A perfect marriage and hang the expense 

Peter Marsh examines the benefits of employing a high-cost method of welding dissimilar metals 

- - • 

SOME OF the lorries rumbling 
around Europe and made by 
Iveco, the Fiat subsidiary, con- 
tain a small but significant tech- 
nical innovation which im- 
proves fhel consumption and 
reduces engine wear. 

This innovative device, cre- 
ated by a precise though expen- 
sive method of joining two 
pieces of dissimilar metals with 
a very strong bond, owes its suc- 
cess to electron-beam welding. 

The technique, a spin-off from 
high-energy physics, is gaining 
momentum in a variety of indus- 
tries, particularly in motor ve- 
hicles, aerospace and speci- 
alised metal goods. Its high cost, 
however, is keeping the number 
of users relatively restricted. 

In the case of the Iveco trucks, 
their engines contain small 
parts known as cam followers 
which are made of two compo- 
nents - one hollow, the other 
solid. They - are constructed 
from different types of steel, 
and the fact that one is hollow 
reduces the weight of the mov- 
ing parts in the engines, leading 
to lower energy losses and less 

Berthold, the company in 
Stuttgart which makes the de- 
vices on Iveco's behalf found 
the only way it could join the 
pieces of metal without weaken- 
ing the finished part was by 
welding with electron beams, a 
way of targeting a precise dose 
of energy on a tiny area in order 
to fuse two or more components. 

The method produces a deep 
weld, with only a minute region 
either side of the join affected 
by heat This minimises the de- 
gree to which the metal is weak- 

With electron-beam ma- 
chines, a weld 1 mm wide can be 
produced to a depth of op to 20 
mm, some 20 times the depth 
that is available with conven- 
tional arc welding - in which 
horizontal heat dissipation is 
much greater. 

The technique's drawback is 
its cost Production of high-en- 
ergy electron beams - those in 
welding machines are any thing 

Cable for high-voltage, 
bias and filament supplies 

j High-voltage feed through 

/ Electrode 
/ (Bias cup)"- — | 
f / Filament — i 

/ (Cath0de) Anode — j 

I Isolation valve 

f PrisrrvvJ 

Viewing telescope — (Vj 

Magnetic focus coils j 

Beam-deflection coil — ~*- 





‘Electron beam 

Pumping port 

Vacuum chamber- 

ComputBr-ccOTtroltedetectrim-toeamweMl^:Hlnlpiislng the deyee to wWchmetata are w ea kened 

up to 150,000 volts - requires ex- 
pensive and specialised equip- 

Moreover, as electrons cannot 
exist freely in air, the complete 
System, including the metal 
parts to be welded, have to be 
kept in a vacuum chamber, ad- 
ding fhrther to costs. 

World sales of electron-beam 
welders, which sell for £50,000 
to £500,000 depending on size 
and sophistication, add up to 
about £25m a year, estimates 
David Eccleston, managing di- 
rector of Wentgate, a UK com- 
pany based in St Ives Cambrid- 
geshire. Weutgate, part of the 
Thermal Scientific group, is 
among the world leaders in the 

To sales of the equipment it- 
self should be added the activi- 
ties of a number of specialised 
welding job-shops which oper- 
ate machines on behalf of cus- 
tomers on a sub-contracting ba- 
sis. Hiring such equipment, for 
example to weld parts of a tur- 
bine blade, can cost £150 to 

Among the European elec- 
tron-beam job-shops specialis- 
ing in aerospace are Sifco Tur- 
bine, of the Irish Republic, and 
Sermatech, based in Britain. 
They commonly take on repair 
work from aircraft or engine 
concerns which - rather than re- 
place an expensive part like a 
turbine blade that is damaged - 
find it cheaper to mend broken 
components, albeit with costly 
and sophisticated hardware: 

Applications of the technolo- 
gy in aerospace are increasing, 
according to Matt Black, a met- 
allurgical engineer at the gas 
turbines division of Parker 
Hannifin, a specialised engi- 
neering company in Cleveland, 
Ohio. Black, whose company 
uses electron-beam welding to 
turn ont components for aero- 
space concerns such as Rolls- 
Royce, General Electric and 
Pratt and Whitney, says that the 
industry's move towards more 
complex parts, in nozzles for fu- 
el-injection systems for in- 
stance, makes the use of such 
high-precision equipment in- 
creasingly necessary. 

Use of electron-beam systems 
is helped by the general trend 
in which manufacturers of 
high-value engineering parts 
are trying to automate as many 
of their processes as possible. 
Components can be shuttled in 
and out of the electron-beam 
systems using special fixtures 
which reduce handling costs. 

In some cases, suppliers of 
electron-beam welding equip- 
ment, which besides Wentgate,. 
include Leybold Heraeus and. 
Messer Griesheim of West Ger- 
many and Sciaky, a US company 
recently bought by Britain’s 
Ferranti, provide these fixtures 
as part of a complete automated 
system controlled by comput- 

In the case of Berthold of 
Stuttgart, fiie company has 
bought two electron-beam ma- 
chines, at a total cost of about 
£300,000. The company, which 
besides supplying the Fiat sub- 
sidiary makes engine compo- 
nents for Daimler-Benz, BMW, 
Volvo, Cummins, Volkswagen 
and Rolls-Royce, has found the 
investment justified, according 

to Peter Peppier, head of re- 
search and development at Ber- 
thold. He says that electron- 
beam welding is especially use- 
ful when a customer requires a 
flow of parts of unifbrmly high 

AE, the UK motor parts com- 
pany owned by T and N, former- 
ly Turner and Newall, is anoth- 
er user of electron-beam 
welding. It incorporates the 
technology to add tough seg- 
ments of metal to sections of 
pistons, thus reinforcing them 
against the effects of piston-ring 

Chuck Clark, vice president in 
charge of mwrfcwttng at Sciaky, 
the US company, points out that 
electron-beam systems "are an 
expensive way to join two 
pieces of metal; most compa- 
nies will find other ways of do- 
ing it* 

It appears, however, that in 
relatively mundane areas of en- 
gineering the technology is be- 
ginning to play a part in in- 
stances where companies are 
demanding higher levels of pre- 
cision welding. 

For example, FowerpZex 
Technologies, of Toronto, is us- 
ing an electron-beam machine 
to seal the alumiuninm alloy 
cases of sodinm sulphur cells 
used in electric vehicles. The 
system incorporates a comput- 
er-driven facility that checks 
welding quality. 

In the UK, Platon, a Basings- 
toke-based company which 
matei flow meters, is due to buy 
a Wentgate machine for speci- 
alised welding, while Walter 
Jones, a company in London, 
uses the equipment to fix to- 
gether the pieces of electric mo- 

Wentgate has also had suc- 
cess in selling its machines to 

pn girwaring gg tahlighrao^ c rnp 

by the Indian Government The 
Bhaba Atomic Research Centre 
uses the equipment in research 
into nuclear reactors, and the 
Vikram Space Centre, part of 
India’s state-run space organi- 
sation, welds together parts of 
rockets and satellites with elec- 
tron beams. 

Ybu are in Eastern Europe and don't speak a word of the language. Ybu have been told to go “ due east at the 
junction.” ft’s 4 o’clock and wilt soon be dark. How do you decide which way to go? 


Edited fay Geoffrey Charlish 

Printing with a 
colourful future 

printers that can produce fUH- 
colonr results cm paper, doth, 
polyester and many other sur- 
faces np to 34ins x 441ns, have 
bees introduced into the UK 
by Iiisfland of Hove in Snssex. 

Made by Iris Graphics of Sto- 
sebam, Massachusetts, the 
printers will have many appli- 
cations in the ffranhfcs and 
pri n t ing industries when the 
input is from a computer. 

Ink-jet printers work by al- 
lowing very small droplets of 
Ink to fall on the printing sur- 
face under the direction of an 
electrostatic field controlled 
by a computerised image. 

There are also likely to be 
uses where the Images pro- 
duced by computer-aided de- 
sign (CAD) systems have to be 
printed is large formats, for 
example In map »—Hng ami 
engineering drawings. 

More space made for 
flights of fancy 

pany Sin ger Link-Miles is to 
expand its UK facilities la 
Lancing, Snssex, by about as 
per cent, or MOM square feet. 

The mace is needed to ac- 
commodate work resalting 
from simulator contracts for 
civil and military aircraft, 
tanks and submarines. The 
company, part of the US Huger 
gronp, added 2t0 new jobs in 
1987 and now has a wo r k for ce 
-exceeding 1,798. 

Dutch take control 
in the storehouse 

erlands is marketing a system 
for controlling the climates of 
storehouses where agricultur- 
al products are kept, particu- 
larly onions, potatoes and flow- 
er bulbs. . 

Called Quod 150, the system 
nses sensors and a personal 
computer which is pro- 
grammed to allow tempera- 
ture, ventilation and condensa- 
tion levels to be controlled by a 
program which the nser can 
decide and easily change from 
file keyboard. 

When necessary, operation 
of control devices can be car- 
ried ont from the keyboard, 
and the system keeps a record 
of everything that has taken 

Give your trade with Eastern Europe 
new direction 

Financial Times Fri day September 18 19871 

| Sta ndard L ife 


rcMiofder security 11 he . | 


SSWdffiufS commercial 

property needs 

Low-cost sign of 
card-holder security 

eqaipment, designed in Cm UK 
and further developed in the 
! ‘US, is to be offered in Britain 

at a basic price of £858. 

At this price, the system wul 
prove attractive to indnstaea 
pnQTu-pj retailing and se- 
curity access, where confirm- 
ing that card holders are who 
they say they are remains a 

A cash terminal, for exam- 
ple, senses only that a person 
holding the right card and 
.knowing the correct identifica- 
tion number is obtaining cash. 
So for, signature verfi cation, 
in which t h* card presenter 
writes onto an electronic 
point-of-transsetion tablet for 

to be expensive. 

ed by Professor Martin Healy 
of Crfmdiflf University, carried 
ont detailed development work 
for Signify, a company started 
by Alan Leibert to develop a 
low-cost version of sack a sys- 

Late In MSS a US group, 
HcQuorqnedale Holdings, 
bought an 89 per cent interest 
in Leiberfs company and set 
up M gwHy in the US to boring 
the product to the production 
stage. UK marketing is bong 
handled independently by 
Alan Leibert Associates. 

The Leibert system, called 
Sign/on, nses a digitising tab- 
. let and stores 13 characteris- 
tics of the signature for com- 
parison with a statistical 
template held inside the ma- 
chine. Characteristics include 
writing time, the times the pen 
spends off the paper and Ike 
pen’s acceleration and retarda- 
tion characteristics. 

The foct that a person’s sig- 
nature is never quite the same 
twice Is largely overcome by 
the historical nature of the 
stared template for each nser. 

As each variant occurs. It Is 
taken account of in the tem- 
plate. Thus, statistical distri- 
butions of the characteristics 
are built up and the limits of 
acceptance varied according to 

Adcvriotxmsit by Standard Life 
nufenjH the difference. 

The new wave at 
BBC Radio Four 

the BBC Radio Four long- 
wave transmitters, which fin- 
many years have operated at a 
frequency of SWfcHx, are to 
move to 198kHz in February 
1988. This Is to comply with a 
World Admini strat i ve Radio 
Conference (WARC) ruling 
ti» at longwave stations must be 
separated by 9kHz. 

There may be slightly im- 
proved reception in seme ar- 
eas. However, those mainly af- 
fected will be industrial 
concerns that use the trans- 
mitter as a frequency standard 
(it is very accurately con- 
trolled by the BBQ. 

IBM attacks on the 
publishing front 

Machines (IBM) has fired a 
shot across the bows of desktop 
publishing equipment compa- 
nies like Apple and Rank Xe- 
rox. It has announced the IBM 
Personal Publishing System 
that will run on the System 2 
(model 80421) personal com- 
puter or the PC AT or XT288 

The company says the sys- 
tem will bring a new level of 
quality to document produc- 
tion, allowing text; graphics 
and digitised images to be laid 
ont cost-effectively using 43 ty- 
pefeces in sixes from four to 
127 point 

IBM is offering a new high- 
resolution laser printer, an 
adaptor card for the PC and the 
necessary application soft- 
ware. The list prices are, re- 
spectively, £2*544, £L287 and 


THE M^nNs is 1 ' 


I'.-' >1 f M 

mil j nvt 




Austria's trade links with Eastern Europe 
stretch back into history. Today Austria, a neutral 
state in a key geographical position, enjoys 
cultural, business and language ties with the East 
and good relations with ail European countries. 
Creditanstalt as the country's leading international 
bank, offers you: 

# wide experience in arranging and developing 
business with Eastern Europe 

• specialist skills in counter-purchase, barter and 
buy-back transactions, services critical to success 
in these markets. 

Cali Credttanstalt, London (01) 822 2600 or 
Vienna (0222) 6622-2593. 

fi ess 


Austria’s leading international bank 

Creditanstalt- Bankverein 

London Branch: 29 Gresham Street London EC2V 7AH. Telephone (01) 822 2600. Telex: 894612. 

Head Office: Schottengasse 6. A-1010 Vienna. Telephone (0222) 6622-2593.Telex: 133030. 

New Vbrk Branch: 71 7 5th Avenue, New York. NYi 0022. Telephone (21 2) 308 6400. Telex: (RCA) 239895/(n~0 424700. 



The Financial Times proposes to publish a 
Survey on the above on 


For afuU editorial synopsis and details of 
available advertisement positions please 

on 061-834 9381 

or write to him at: 

Alexandra Buildings, Queen Street 
Manchester M2 5LF 
Telex: 666813 



You are cortBaMy fmritatf to an oranrfew of a 

HfeAfr Innovative 


Ondudlng a Natural Language Software Demo) 
'bfOr. S. PalAsHa 

foe first Safhraro Patent) 

on September 1ft 1 997 (Saturday) 9 sun. to noon 
(repeat 2-5 j xm. If necessary) 
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taret{DB«)ZWni TafecSK 
* 42 ) 2*2881 


Financial Times Friday September IS 1987 


market MAKERS for proper- 
ty atocfcr do not expect the price 
Of Scottish Metropolitan Prop- 
erty to move very much. And 
they are right. For the Inst year, 
the sector has been humming, 
but ScotMet has moved quietly 
between 90p and 146p, recently 
hovering around 130p. 

One reason is that the shares 
are tightly held « Royal Insur- 
ance has 20.6 per cent. Guard- 
ian Royal Exchange has 19.7 per 
cent and USp Nominees has 5.7 
per cent, while about 70 of the 
remaining 4,000 shareholders 
hold the bulk of the rest of the 

Another Is that the Glasgow- 
based company seemed to be 
going through a dormant phase. 
Nothing much appeared to be 
happening on the surface and 
the company kept itself pretty 
much to itself, respected but 
lacking vitality. Anyway, five 
years ago more than 90 per cent 
of its portfolio was In Scotland. 

Even Gordon Milne, the man- 
aging director, was prepared to 
accept for the company the tep- 
id epithet of sleeping giant 
Equally, he now accepts the 
cliche that the steeping giant is 

Over the last month there has ' 
been evidence of a more aggres- 
sive approach: purchase of a- 
shopping centre in Leicester, 
an office development site in 
Crawley and a business park 
site along the M4 corridor. The 
first provides income now, the 
other two the promise of fixture 

When the results for the year 
to August are announced next 
month, there should be a 
healthy increase compared with 
the £7.07m earned pretax in 
1985-86 and earnings per share 
of 4,67p, and a rise iu the net 
asset value per share - put at 
110.5p last November. 

This decade three key things 
have happened which 
that a freshly groomed 
is emerging: 

The sleeping 
giant awakens 

•'Over the years we had been 
very conservative - we were a 
pure investment company,* says 
Mr Miln e. Now the company has 
an extending development pro- 
gramme and is prepared to 

• A younger management 
team has been introduced and 
this has helped lead the compa- 
ny into puffing greater stress on 

• The portfolio has been dra- 
matically pruned. "But we were 
never In a forced sale position,* 
Mr Milne stresses. In 1978 there 
were 750 buildings. Now there 
are 300. and the asset value has 
doubled Co more than £ 120 m. 

Revenue from sales has been 
available to plou gh back into 
development, and resources 
were increased a year ago with 
a £3Qm first mortgage deben- 
ture stock. Funds from that 

stock have largely been used 

Over the next two years, the 
total development programme 
will cost about £50m - not exact- 
ly on the scale of Land Securi- 
ties but substantial compared 
with the ScotMet performance 
of a few years back. 

Within the next two years, the 
company will probably have to 
go to the market for funds. An- 
other debenture is a possibility ,- 
depending on what the coupon 
would have to be, Unless the 
share price perks up- and given 
the breakdown of the equity 
holdings it seems doubtful if it 
will emerge as • high-flier - a 
rights issue does not seem on 
the cards. But a convertible 
preference share issue might 

Like any other property com- 

SCOTTISH Metropolitan Property and Regalian 
Properties are branching out. The first has been 
quiet en the market to the extent that the boom in 
property shares seems almost to have passed it by. 
The second has riot only been actively traded, bnt has 
used its paper vigorously to ftand acquisitions. 
ScotMet, the largest of the investment and 
development companies north of the border, Is 
bursting oat of its Scottish chrysalis. Regalian, after 
starting with the rehabilitation of inner-eity housing 
blocks and moving on to new residential 
development, is looking increasingly at commercial 

pany, ScotMet wants the securi- 
ty of adequate long-term fund- 
ing. Its technique broadly has 
been to fund its site purchases 
with long-term finance and its 
development costs with snort- 
er-terra bank facilities. Its bay- 
ing policy is cautious. Property 
in the City of London is ruled 
out fay Mr Milne simply because 
the numbers are too big. He is a 
proponent of the adage that 
"profit is made when you buy, 
not when you selL” 

But the development and in- 
vestment programme is taking 
ScotMet away from Its tradition- 
al base. It is no longer a Scottish 
company, but a British company 
based in Scotland. The latest in- 
vestments mean that ScotMet's 
geographical spread has wid- 
ened to 70 per eent Scotland 
and 30 per cent the rest of 

This is a conscious policy 
which has been developed 
since Scotmet started to look for 
expansion. The reason, as Mr 
Milne explains, is the 10 per 
cent theory. Scotland has 10 per 
cent of the land and 10 per cent 
of the population. It Is simply 
not large enough to satisfy a 
drive for expansion. There is al- 
so the fret that rental growth 
has tended to be greater in the 

Where the company expands 
is dictated as much by manage- 
ment time as fay anything else. 
In effect, the company is 
looking for opportunities an 
hour's driving time from Heath- 
row Airport, not only because 
this is the most prosperous area 
of the UK but also because if an 
executive is coming from Glas- 
gow, this area is the easiest to 

Investments will remain di- 
versified. Nearly half of the 
portfolio is in retail property, 
just over a third in offices and 
the rest in industrial and high 
technology. The general drift is 
to Increase the retail at the ex- 
pense of offices. 

with the 
help of 
a lucky 

HORSESHOE Court on the 
south bank of the river Thames 
at Southwark Bridge Is not just 
the new London headquarters 
of the Financial Times. It is al- 
so a boost to the profitability of 
Regalian Properties. 

The sale to Pearson for 
274.4m, says David Goldstene, 
the managing director, "effec- 
tively ensures the growth of 
our profitability over a three- 
year period." Payments from 
Pearson are staged over that 
time, starting with an immedi- 
ate £28m. 

Beyond that, though, the sale 
represents an early success for 
Regalfan’s diversification out 
of residential refurbishment, 
the basis of its profitability so 
for. This was no forced sale: 

Pretax profits more than 
doubled over the 1986-87 year 
to £&2m and are set to contin- 
ue growing this year on the 
back of the bousing boom. "We 
could have held the project," 
says Mr Go Ids tone, who had 
undertaken it on the assump- 
tion that the rents would be 
about £25 a sq ft. 

"But there was a certain log- 
ic in selling when the capital 
value reflected rents of nearer 
£S5. And if office supply 
catches up, (here would not be 
d ramatic increases at the first 
rent review,* he says. 

At one stage the project had 
looked like icing on the Regal* 
ian cake. And the same could 
be said for the 100,000 sq ft of- 
fice content of Regalian's Free 
Trade Wharf scheme in Lon- 
don Docklands. 

However, in the future there 
is likely to be a stronger com- 
mercial content in Begalian 
development schemes. Partly, 
this springs from the logic af 
urban renewal, which Regal- 
ian sees as its stock-in-trade. 
There is willingness to realise 

that urban renewal is not 
merely urban housing renew- 
al,' says Mr GoUstone. 

' The bigger urban redevelop- 
ments tend to be mixed and Hr 
Goldstone believes that Regal- 
ian can span the spectrum - 
something he suggests only a 
relatively few companies can 
do. So it is to be expected that 
Regalian will be among the 
bidders -for inner-city projects 
which go beyond the provision 
of boosing. 

Re galian could well bid for 
an offices-bo using scheme in 
Victoria, west London, when it 
comes on the market shortly. 

None of this is to say that Re- 
galian will go for any office 
scheme that happens to be 
around, and which attracts de- 
velopers by the dozen. Bat resi- 
dential schemes with a com- 
mercial content are different: 
They are not likely to attract 
more than half a dozen mater 
companies," says Mr Goldstone. 

U-lKtA Wrw-* : : r * 

v .... , r . ..... ■ . , . -. . • ■ . . * /'a.F/rnT* 

.. . • ' -V- ■„ sHV 

in only three years Kavenside Irivesfinenfs Ltd. — the Retail Warehouse arm of Land Securities PLC 
- has established one of the largest portfolios of its type in the country. 

Of a total of 35 million square feet: 

2 million square feet is already devdoped and producing income. 

800.000 square feet is either under construction or about to start 

700.000 square feet is subject to planning consent and/or contract 

Our aim for the future is to maintain this rapid growth rate. 

To do so, we need more sitesljoint developmentslinvestments/sale and leasebacks. 

— Contact 

John Maynard, at Land Securities 
Landsec House, 21 New Fetter Lane 
London EC4P 4PY. Telephone: 01-353 4222. 

Graham Chase, at Clive Lewis & Partners 
or 8/9 Stratton Street, Mayfair 

London W1X 5FD. Telephone: 01-499 1001 







Atirsa/vlrta W 
HartlM Kingston Or 





Cabin £ Vest Commercial. 

12 the Mown!. Gulldjbrd. 
Surrey, G125HS 

Guildford (0483) 577277 


High Volume trading Potential 
Busy Commuter Location 
Stylish New Facades 

For details please contact David Jackson 

■ ■- 

LHtaStftVItt - 
TBferim* 61422 62S8 


1/3000 sq ft- Large door, new London port, max approx 1 hour away. 

Please Telex 842X66 
PIMM (H/436I93 



3057 SQ. FT appbox. 




Ttefc tfl-629 510L Fax: 01-493 3781 

The South Western shores of Lake Windermere known as 


We are privileged to offer for sale this unique property which comprises 
ap pro xim ately 85 acres of meadow and woodland having one mile of 
fronts#: to England's premier lake. The laid is roughly oblong in shape 
and sandwiched between Lake Windermere and the Newby Bridge to 
Hawksbead Road. It is unusual for such a large pared of land in this area 
to be owned privately and we shall be pleased to provide further 
information to those genuinely wishing to aquire such a beautiful and 
nnspoflt property. 


Apply Sale Again: 


26 Market Plan Kendal - Tab (0539) 27378 




5 YR. R.Rs 




MSftMWW W*ta '■r—. MWl i 




■ 4&5. 

Bell Yard 


Valuable freehold for Sale 

By Tender 

Q/jstnc Dste- t2 Noon 
2KrOcrofi£H 1987 


2V24 MaroakktKi: 
TEL 01-637 0823 




Current Rent £18,000 p.a. 
Offers in the region of 

For full information apply to; 
7/8 Downing Street, 
Cambridge CB2 SDR 
TeL (0223) 63291 


; o 

; vi 



! > 






0£ acres, FREEHOLD 

! □□ 

> T ~"i 


01-6202180 | 



Block A- IWOiqdt. 
Block B - 17,39s 
rirtnang u^cs sq.It. 

♦inilwWW tlBtaHM.AH 
01-734 B155 

01-631 4050 

Solicitors, Accountants, Trustees 
SdisfaotUl Prion bwcstnrwMia n> purchase 
Investment Property CampmtesfTraO% etc. 
Pomtal Capital Gains Tax not treated as a 
Ifabmty ia cfamtafag oafae of ampav's sets. 

Send Detain In Strictest Confidence to:— 
But T&544 Flaanetad Thus, IB CanOM 
Stmt, Loadoa, EC4P 48V 



2000-14300 14.(1. 



Cbm AUM 

maw tcwiob a cttHtmoa 

nontu stud a sum 


bony famished office*, prominent posi- 
tion, anneal licence, rent includes rates;, 
lighting, cleaning. Telephone 


Mr MfrBfi 8Mfi W«f P»2 «592B 

Urgently Seek 

Independent or Joint Venture Office 
Development Projects In Central 

Mn. £20m— No Upper Limit 
Prtndtydi or retained agora on* wfle 
Bex 7C545, Financial TTbjm, 

10 Canaan Strut, London, EC4P 46V 



8-32 fans RH Mduatriai Sit* 
between Mil and M40 
Principals or Rotsined Agents oaty 
Wrtte Box TC548 Rnanefai Times, in 
Camon Steel. London BMP 48* 

BEsmanuu. snES 

For dwriBoawi ia Carol UBdaWHcro C aripr- 
togk dials m Ups dftt SriKhndri Ml) arfstta 

56 Gramm St, London MIA 9DA 
01-499 5695 



OmBodBl and Dcvdepmeni 

All types of funding 
Bay Cornford 
61400 7797 

m s 3fEZZS5£S£; 

01-546 1316. 

RUGATE, Storey: 2.7 TO » «■ AlMWif 
New boadtao. 0 b sitt perkfai 
RKb27AlE«arie Street, U«n*" W1X 


Teh John Piper an 01-480 7544 
or Hitary Bryan on 
0444 457601 




* Prime 10 aero alto 

* ResUontU/HoteVTicneahara 

* Independent or John venture 
da w atopme n t 

| ntadptib or Mataad Aoeds only 
Box 165(7. Hmatftri Ttoas 
10 Cam SL LnedOB EC4 4BY. 

Estate Agents 
13 & 5 Pack Street, London El 

Our Dock Street offices hare bntiuetloK to 
seek far pretii a se 20 freetaW ur long lease 
P*ae h u « g fto le faftes tt i »a n ts fa London & 
hone co nies . 

(Ownere mar tease bade tMr premises 
l—eri a tely if retired) 


Please reply promptly — 
Telephone 01-470 3758 

Art Galleries 

vuaue SPEAKING mining and sown writing by 
award whuring patiUc speaker. Flm leson tiro. 
01-8396552- TH3BY 

OIIELL GALLERIES. An ExHhttlofl ol Rndan and 
Scandanatian Paintings. 43a Duke Street St 
James’s. London, SWL Tel: 01-430 7744. 
HoB.-FrL 9 J0-5, Sat. lO-L TH3BV 

Open until 20dl Siptenter. Qafly Uam-7pin 
ewepl Snlay 20Hi Uam4pm- AdiMsston £550 
Inc handbook. TH3BY 

Company Notices 

De Beers Consolidated Mines Limited 

bemporeud in the Republic of South Africa 

Registration No 11/00007/06 

ffoeorporeled In (be Republic of South Africa) 
ffadtomlw No. UAKWJ7I06 


With reference to tta notice of declaration of efiridrod advertised In tte Press m 19th August, 1987 at 
foCzwrfiig InfnnnatliM Is pubRshed (or boidm d stare warrants to bearer. 

The dWdend of 27J cents per share was declared in Soath A/rioa carremy. 5Mh African ihmuMmI 
steeholdrfir tas at 149029 cents per share bB be dKhMMd from ibr dMdend payable fa respea ol an 
share warrant catww tearing a net riridend el ZSA971 erms per share. 

The iSridead on bearer sbares will be paid on or after 4th Nownahre, 1987 agrinsi sneader el coupoa 
llo 79 deuchrd Iren stare warrem lo hearer as nadre >- 

U) At the offices ol the (allowing anOnem! paying agrees : 

Bantyw BruMtles LaRriert 
24 Areime Marafa 
1090 Brussels 

Croerale de Banwe 
3 MoaUgne du Parc 
1000 Bmsels 

L'Efaopeenif dr Banqoe 
23 roe Laffittt 
7S428 Paris 

Bampir fnternathnaSe a Uxeiataag SJL 

Z Boulcrerd Royal 


Crerit Seine 
Paradeplatz B 
BOZX Zurich 

Swiss Bank Corporation 
1 Ancteomretadt 
4002 Bade 

Union Bank of Swteertand 
Bahohoftintssr 45 
8)23 Zurich 

Payments In rasped of coupoos lodged at tht offices da cooilnretai paying agent win be made In South 
African currency to an authorised dealer hnuftangr In the Republic « South Africa aoodnated by the 
ccmfaemnf paying aged. InstnKtkns rrgarSng disposal of the proceeds ol the payment so made can 
ofay be ghrea to such audurised dealer fa tte contioenul paying agea csocerned. 

Q) At the Securities Dcfarimeoi of Hill Sanwri & Co. Limited, 45 Beech Street, 

Unless ptrsons depositing coupons at soOb office reituM paycoeM In rand to an 

a. payment bO be tude fa United Kingdom currency either ; 
1 lodged on or ’ * 

b the 

untesx persons depeWng 
Republic of Sooth Africa. 

01 fa respect olcoopoos lodged oo or prior to28tli October, 1987, at iMUniwd'Ktagdonegmcy 
equfvahfa of the nod carreney aloe of their dhridend an 28th September, 1987, or 
(81 fa respect of coupon lodged after Z8th October, 1987, at ttv pmanmg rate of euhutge on 
the day tta proceeds me remlned, through an authorised dealer In erdianae fa Jotumrsfauro 
to the Securities Drparuneoi of HID Samuel A Co. Untiled. 

Gocports awst be left for ■ lead four dear days far rsamlaattan and may be preseoted any weekday 
fSaowdw eacepted) between the hours of 1000 ajn. and 309 pjxl 

United Kingden Income tax wfa be deducted from payments to am person fa (he United Kingdom fa 
respect of coupons deposited a) the Secsritln Department of Hid Samuel A Co. Lfadted, unless such 
coupons are acowpinlrd far Intand Rereoue aon-residence decoration forms. Where such deduction Is 
made, the oef a m ou rt of the dhidend will be the United Kingdom currency rtptbaleni of 20.075 cents 
pc r snare ‘ 

cents per share 

Amdom of Oridend declared 
Lcn: South African Nsn-RoWetd 
Shareholders' tax at 6356% 

LtSR UK Income (ax at 20.444% on the gross amourt of the 
dMdcnd of 27 S erect 






Tor and on behalf of 


London Secretaries 
P. E, C- Dexter 

London Office.* 

40 Holhona Vlaihct 
Londao EOP 1AJ 

N0IE . 17lh September, 1987 

TTte CMtany tas been retywsted far the Commissioners of Inland Rereoue to State : 

J*; ttoutt* tax agreement between the United Kingdom amt (he Republic of South Afrit*, tta 
somn Airieaa non-reskfcnt iharritdfen' ta a^pficaWe to the tbrislend h »lto«ttte os 2 ernfa against 
*?* •“ respea af the dhidend. The deducuan ef a* n me reduced rate of 

20.444% bBteid ef tta bask me of ZI% repre se n ts an allowance ol ereSi at the rate of AJUbK. 

De Beers 

De Bw»ConioUiatedMuiHbnMad 


Reating Rate Subordinated Capital Notes 1996 
In accordance with the provisions of the notes Notice Is Hereby 
Given that for the period 18 September to IB December 1987 the 
notes will carry a rate of interest of 77 a per cent per annum with a 
coupon amount of US$199.06. 

Chemical Bank as Agent 

Financial Times Friday September 18 1987 




other highlight is a reconstruction 
of the 3000 year old burial chamber 
of Sennefer, the former mayor of 
antique Thebes. Clothes, household 
appliances, tools, cosmetics and je- 
wellery illustrate the everyday life 
of Egyptian citizens. Ends Nov 29. 


F |S|5u|M|Tu|Wp 
25 26 27 28 29 30 1 


Fine Prints in France from the 16th to 
the 1 9th century. More than 200 im- 
pressions of exceptional quality 
from the print department of the Bi- 
hliotheque Nationale show the infi- 
nite possibilities of artistic ex- 
pression through varied techniques 
of printmaking. The panorama 
ranges from early engravings show- 
ing strong Flemisch, German and 
Italian influence to the majestic 
Grand Siecle style under Louis 
XIVtii, from Boucher's pastet-bued 
sujects gal ants to the modernity of 
Toulouse-Lautrec and the striking 
colours of Bonnard. Bibliotheque 
National?, Galerie Mansart, 58 rue 
Richelieu, ends Nov 2. 

The Tbte Gallery. Turner in the new 
□ore Gallery: The Turner Bequest, 
which amounts to nearly 300 oil 
paintings, finished and unfinished, 
and a further 19,000 or so watercol- 
ours and drawings, has been a 
source of controversy and dissen- 
sion ever since it came into the na- 
tion's hands more than 230 years 
ago. Turner had always wished for a 
gallery to himself which would show 
all aspects of his work. Whether he 
would have approved of James Stir- 
ling's extension to the Tste as a suit- 
able setting is a nice question. The 
larger paintings may be hung too 
low for one who lived in a more os- 
tentatious age, and the tasteful oat- 
meal Stirling has decreed for the 
principal galleries is a far cry from 
the nch plum he is known to have 
preferred. The vulgar neo-deco of 
the entrance hall has little to recom- 
mend it. But eight rooms for paint- 
ings and one for watercolours give 
room enough, and with the three re- 
serve galleries upstairs, every paint- 
ing but the few in restoration or on 
loan is on the walL 

Veronese may have influenced Ma- 
tisse. Until October 18. 

Rome: Palazzo Braschi: Painter-Photo- 
graphers in Rome: 1845-1870: The 
term Painter-Photographer was 
used almost up to 1970 to describe 
the early photographers, even if 
they bad never painted- An absorb- 
ing collection of documentary photo- 
graphs of Rome, including a collec- 
tion by the English archeologist, 
John Henry Parker, and some stri- 
king portraits, all from the archives 
of the' Rome Comime. Ends Sept 27. 

Venice; Palazzo Grassi: Jean Tinguely: 
1954-1987: The jokey mechanical 
sculpture of Swiss artist Jean 
Tinguely. A gentler, but still mis- 
chievous, version of Salvador Dali, 
Tinguely describes some of his in- 
credible moving sculptures (all built 
from refuse iron and steel) as “ma- 
chines a sentiments, - and the com- 
plexity and sheer improbability of 
his works communicate a touching 
"joie de idvre." Over 300 works are 
on show, lent by American and Eu- 
ropean museums, with photographs 
of his first Self-Destruiding Sculp- 
ture. Homage to New York, which 
duly self-destructed in the gardens 
of the Museum rtf Modern Art in 
New York in 1980. Ends Oct 18. 

despair in the American heartland 
of the scope and depth of Evans’ 
work originally done for the Farm 
Security Administration. Ends Nov 
8 . 




National Gallery: A Century of Mod- 
ern Sculpture, the Patsy and Ray- 
mond Nasher Collection, contains 
major works by Rodin, Picasso, Ma- 
tisse, Gabo, Giacometti, Erast, 
Moore and Sena. Ends Jan 3. 

Ffirschhorn Museum: One of the Chi- 
cago contemporary primitivists 
whose repeated scenes make evoca- 
tive images has his first major east 
coast retrospective with 49 paint- 
ings and four pwmteH ooastm ctio n s 
Ends Oct 18. 


Hfldesheim, Roetner- und Pelizaeus- 
Museuza, Aid Steine 1-2. Egypt’s 
rise to a World Power More than 
300 pieces loaned by 20 museums in 
Europe, Africa and America - the 
first presentation of the most impor- 
tant 150 years 1550-1400 BC of the 
New Empire in Egypt The bust ol 
pharaoh Thutmosis III, discovered 
in 1007 without a face, can be seen 
complete in Hildesheim. The face, 
found in Egypt only 20 years ago, 
was loaned by a Cairo Museum. An- 

Venice: Ala Napoleonica and Museo 
Comm ‘Matisse and Italy": over 250 
works by one of most poetic of 2{Kb 
century French Painters. The exhi- 
bition includes paintings, drawings, 
and Matisse's entire output of sculp- 
ture (75 pieces in all), lent by private 
and public collections in France and 
America, and the Musee Matisse in 
Nice. Pierre Schneider, die organiz- 
er. has attempted to show bow the 
works of Italian painters such as 
Mantegna, PoUaioto, Giorgione and 


IBM Gallery. Post Modem Architects- 
ral Visions includes an international 
array of dwrigwpr * iwHniijpg Mi- 
chael Graves, Hans Hotieia, and 
Adolfo Naialini with 200 drawings 
and models of work from 1960 to 
1985, originally organised by Willi- 
ams College and Deutsches Archi- 
tekturmoseum in Frankfurt Ends 
Nov 7. 58th & Madison (407 6100). 


Art Institute: Walker Evans photo- 
graphs of the 1930s showing poverty 
and despair in the American South 
were famous in their time in Life 
Magazine and preserved in James 
Agra's moving book. Let Us Now 
Praise Famous Men. This exhibit is 
a reminder at a time of renewed 

Chinese Paintings and Ceramics of tire 
18th- 20th century-. 144 paintings 
33 ceramics comprise this impo rta nt 
exhibition from the Yang He-Tang 
collection in Taipei. The paintings 
include traditional-style waterco- 
lours of la nd sc ap es, birds, flowers 
and portraits. Especially interesting 
are works by literati painters with 
their political overtones - orchid/ 
bamboo/ rock or pioe/bamboo/phun j 
com p osi tions symbolising difficul- 
ties in a harsh political climate. 
Works of China's two most impor- 1 
taut modem painters, Chi Pai-Shih 
(1863-1957) and Fb Pao-Shih , 
(1904-1965), are included. The cer - ' 
a ntics , mostly Chlea-Lung, a ware 
synonymous with excellence, were 
made for the Imperial family. Idem- 
itsu Musemn, HThiya, near main ho- 
tels and Ginza. 'Rnri* Sept 27. 

Modern Japanese Paintings of Ya- 
snsfai Sogiyama. 120 works of one of 
Japan's foremost contemporary art- 
ists. From Nibonga (19th century, 
Westera-infhieocedJapaoese paint- 
ing) to abstract futuristic themes, he 
is one of Japan's most prolific art- 
ists. National Museum of Modern 
Art, near Takebashi Station, off Im- 
perial MoaL Eads Sept 27. 



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Jersey or from Bank of Scotland, 
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Bank of Scotland net assets as 
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— — ' Lnfort ftntliift- tear lint ______ 

Fencre (48th Street): August Wilson 
hit a home-run, this year’s Pulitzer 
Prize, with James Earle Jones tak- 
ing the powerful lead role of an old 
baseball player raisi n g a family m 
an industrial city in the 1958s, try- 
ing to improve lot but dogged by his 
own failings. (221-12U). 

Cals (Winter Garden): Soil a sellout, 
Trevor Nunn's production of TS- EL 
lint’s children’s poetry set to trendy 
music is visually startling ano 
choreo graphically feline, but dassc 
only in the sense of a rather staid 
and overblown idea of theatricality. 
(239 8282). 

42nd Street (Majestic* An immodest 
celebration of the heyday of Broaa- 
wuy in the ’30s incorporates gems 
from the original film like Shuffle 
Off To Buffalo with the appropri- 
ate]/ brash and leggy hoofing by a 
large chorus line. (977 9020). 

A Chorus Line (Shubert): The longest- 
running musical ever in America 
has not only supported Joseph 
Papp’s Public Theater for eight 
years but also updated the mu sical 
genre with its ba ck s tag e story in 
which the songs are used as audi- 
tions rather than emotions. 

(239 6200). 

La Cage anx FoUes (Palace): With 
some tuneful Jerry Herman songs. 
Harvey Herstem's adaptation of the 
French film manages, barely, to cap- 
ture the feel of the sweet and hilar- 
ious or iginal between high-kicking 
*nd gaudy chorus numbers. 


rm Not Bappaport (Booth): The 
Tony's best play of 1986 won on the 
strength of its word-of-mouth popu- 
larity for the two oldsters on Central 
Park benches who bicker uproar- 
iously about Ufe past present and 
future, with a funny plot to match. 
(239 6200). 

Les SSsertfaies (Broadway): Led^ 
pim Wilicnscn: repeating his west 
End role as Jean Vageas. the mag- 
nificent spectacle of Victor Hugo's 
majestic sweep of history and pa- 
thos brings to Broadway lessons in 
pageantry and drama, if not stnct 
adherence to is original source. 
(239 6200)- . , _ 

Starlight Express (Gershwin): Those 
who saw the original at the Victoria 
in London will barely recognise its 
American incarnation: the skaters 
do not hare to go round the whole 
theatre has do get good exercise in 
the spruced-up stage with new 
bridges and American scenery to 
disract from toe hackneyed pep 
music 2nd trumped-up silly plot. 

. (5868510). 

Me and My Girl (Marquis): Even if the 
plot T-rrrq on ironic mimicry cf Pyg- 
malion. this is no dassc, with for- 
gettable songs and dated leadenness 
in a stage fufi cf characters: but it 
has proved to be a durable Broad- 
way hir with its marvellous lead role 
for an agile, engaging and deft ac- 
tor. preferably British. (947 0033). 

flown in from Lo ndo n Tohos Les 
Mfcerables is a triumph. The best 
production of a Western musical in 
Japan, it differs little from the origi- 
nal London version. Convincing and 
moving, this top-quality production 
shows what can be achieved with 
proper casting and training. Spon- 
sored bv the cosmetics company, 
Shisada Imperial Theatre, near 
Ginza. (2817777). 



Cabaret (Opera House): Hal Prince 
again directs Joel Grey as the seduc- 
tive master of ceremonies in a 
Broadway-bound revival of toe evoc- 
ative musical of Berlin life in the 
. 1830s. Ends Oct 3. Kennedy Center 

Antony and Oeopatra (Olivier): Peter 
Haffs best production for the Na- 
tional Theatre he leaves in 1988 
brings this great but notoriously dif- 
ficult play to thrilling life, with Jodi 
Dench and Anthony Hopkins as bat- 
tle scarred lovers on the brink of old 
age:. Dench is angry, witty and ulti- 
mately moving. Best of toe rest at 
toe KC is Michael Gambon giving 
his finest ever performance as Ar- 
thur Miller's doomed longshoreman 
is A new from toe Bridge; Juliet 
Stevenson in a fine revival of Lor- 
ca's Yerxaa; and David Hare's pro- 
duction of King Lear, Hopkins, a 
massive gnarled oak, which gathers 
face and more friends as it contin- 
ues in tiie repertoire (9282252). 

The Pha nt o m of the Opera (Her Maj- 
esty's): Spectacular but emotionally 
nutritional -new musical by Andrew 
Lloyd Webber emphasising the ro- 
‘ mance in Leroux's 1912 novel Hap- 
pens in a wonderful Eteris Opera 
ambience designed by Maria Bjorn- 
son. Hal Prince’s alert, affectionate 
jsoduction contains a superb cen- 
tral p e rf or ma nce by Michael Craw- 
ford. A new, meritorious and pal- 
pable hit (8392244, CC 

The Balcony (Barbican): Sadly dated 
and heavy-handed opening to the 
BSCs Genet r etrospective, not help- 
ing to fight suspicions that toe RSC, 
certainly in London, is stretched 
way beyond its creative capadties. 
- Terry Hands directs, Farrah’s set 
looks like a cheap pink brothel and 

iHserables. After iwntiw imd 
New York, now Tokyo and the Japa- 
nese version of the Tony-award win- 
ning musical. The cast was hand- 
picked by toe creative team of pro- 
ducer Cameron Ma ckin tos h (from 
as astounding 11,500 hopefuls), then 
trained for mwitlw in a special 
“ecole” rehearsed by director 
John Caird. Costumes, set. sound, 
lighting have been supervised by 
the respective original designer 

the actors, a dull lot, damp around 
on high boots is big bulging cos- 
tumes. (8288735). 

Fades (Shaftesbury): Stamtog reviv- 
al. directed by MUteQekreat and de- 
signed by Maria BjorasCo, o! Sond- 
heitns 1971 musical is which poi- 
. soiled marriages nearly undermine 
an ok! burlesque re-union -in a 
doomed theatre. Four new songs, 
improved book by James Goldman. 
Cast led Dolores Gray, Julia 
' McKenzie, Diana Higg, Darnel Mas* 

sey.AH good. (379 5399). 

Meh» (Haymartet): Alan Bates pre- 
dictably good in new Simon Gray, 
riiTTpg il y directed by Christopher 
Morahan. about a jealous pnhfeher 
viewed in flashback from a psychi- 
atric ward after a breakdown. Men- 
opausal mutterings, not vintage 
Gray. (930 9832). 

Serious Money (Wyndbara’s): Transfer 
from Royal Court of Coxy! Chur- 
chill's slick City comedy for cham- 
pagne-swilling yuppies: how the Big 
Rang fed to tumult ami bar- 
row-boy dealings on the Stock Ex- 
change. Hot and livid, but new cast 
deemed less good. (63S3CZ8, CC 

A j fow fl Family Bnsfaaws (Olivier): 
Brilliant new Alan Ayckbourn play 
about Britain on the fiddle in greedy 
times, selling out to foreigners and 
keeping ft simultaneously in the 
family. A comedy thriller on the 
large scale, Ayckbourn's own pro- 
duction is led majestically by Mi- 
chael Gambon. Best of the NT rest 
remains King T*»«r and Antony and 
- Cleopatra in the Ofivier, A View 
From , the Bridge in toe Cottesloe- 
Tbe new Brian Friel adaptation of 
Turgenev's Fathers and Sons is de- 
cent but dull in toe Lyttelton. 
(928 2252). 

Three Men on a Horse (Vaudeville): 
George Abbott’s sprightly gambling 
comedy has transferred from the 
National. Geoffrey Hutchings in the 
lead now joined by Toyah Wilcox 
(838 9987). 

Opera and Ballet 

marm , Eva Tamassy and Raadell 


Berlin, Deutsche Open Bosom’s rarely 
played Doktor Faust features Lucy 
Peacock. Kenneth Riegel and An- 
dreas Schmid t Tannhauser in Kurt 
Hones' production stars Janis Mar- 
tin, Sharon Sweet and Spas Wen- 
k off. Macon Lescaut has PUar Lor- 
engar, George Fortune and Giorgio 
LambertL The week also offers Bo- 
ris Batcher's PreuQisches Marchen. 

Stuttgart, Wurttembergisches Staats- 
ihealer. Dec RosenkavaBer is 
steered to triumph by Karan Arm- 
strong. Trud eU ese Schmidt and Hel- 
mut Berger-Tuna. 

Hamburg, Staotstheater Don Giovan- 
ni. conducted by Peter Scbreier, 
takes toe leads Julia Varady, Samu- 
el Barn ey Kurt MoO. La Qem- 
ensadiTito brings Judit Beckmann. 
Pamela Coburn, Werner HoQweg 
and Harald Stamm together. La Bo- 
heme has a particularly strong cast 
1 with Rachel Josdaon. Jane Perry 
and Alejandro Ramirez. 

Cologne, Upenc The premiere of Rigo- 
letto, produced by August Eventing. 
The cast includes AHda Femrini, 
Victoria Vergara and Wasfli Jenn- 
lake. The highly-acclaimed produc- 
1 tion of Das schlane Fuch stein by 
Harry Kupfer, has Roland Her- 

Bsyeriscbe Steatsopen Fi- 
delio, in Gate Friedrich's pro duction , 
returns with an attractive cast - 
Hildegard Behrens, Julie Kacf - 
marm, Bodo Brinkmans, Theo 
Adam Rains Goldberg — and 
Hans Martin Schseidt as conductor. 
Don Carlo stars Natalia Troitskaya, 
, Brana Bagfioni, Jewgenij Nestere n - 
ko ami Alberto Cupido- Salome is an 
event of more than passing interest 
with Brigitte Fassbaender. Hilde- 
gard Behrens and Walter Raffemer. 
Falstaff is well cast nzto Pamela Go- 
bum, Brigitte Fassbaender Ju- 
an Pirns. Ariadne anf N earns rounds 
off fee week. 

(Tristan). Deborah Poland (Isolde), 
Jard van Nes (Brangfine) and John 
Bificheler (Knrwenal), Hartnurt 
Haenchen conducting the Con- 
certgebouw Orchestra (255 455). 

Gr onin g e n, Schouwbuig. The Royal 

. Ballet of Flanders with Allegro Bril- 
lante (Balanch ine/Tchaikovskyl. 

Brel (De Layress/Jacques Brel), 
S e iai frce la Mort? (Bejart/R. 
Strauss). Easy Tangos (De Layress/ 
PfazoQa), (125645). 

La Bofadme. T-irwvJn Center 




Amsterdam, Muziektoeater. The Neth- 
erlands Opera production of Wag- 
ner’s Tristan und Isolde directed by 
Jurgen Gosch, with George Gray 

Metropolitan Opera (Opera House): 
The fint week features OtaQo, con- 
ducted by James Levine in franco 
Zeffirelli's production with Kiri Te 
Kanawa nnr ^ Placldo Donongm 
Union, <vwwipeted by Maraud Ros- 
enthal in Jean-Fferxe PtmneOe’s 
production with Catherine Malfita- 
zio and Alfredo Kraus; and Ariadne 
anf Naxos, cond u cted by James Le- 
vine In Bodo lgesz? production with 
Jessye Norman, Battle 

and Tatiana Troyaoos. i™«in Cen- 
ter (382 BOOT). 

New York Gty Opera: Ihe wed: fea- 
tures TurandoL La Rondine, The 
Marriage of Hgaxo, Casanova and 

Royal Opera, Covent Garden: The re- 
vivals of Tannhauser, Falstaff and 
La Boheme scheduled for the 
opening weeks of the Royal Opera 
season are threatened by a dispute: 
between management and chorus* 
Check theatre for details. (240 1066). 

Engtish National Opera, Coliseum: 
The second new production of the 
1967-88 ENO season is a favourite 
with the public strangely long-ab- 
sent from London theatre - Bizet's 
Pearl Fishers. Charles Mackerras 
conducts. Philip Prowse produces in 
his own designs, and the cast in- 
dudes Adrian Martin, Valerie Mas- 
tersoa, and the superb Leningrad 
baritone Sergey Le ife rh ns (ENO de- 
but). Also in repertory: further per- 
formances of Sondheim’s Pacific 
Overtures, a bold venture fop toe 
company, and Salome, with Jose- 
phine Barstow dramatically pow- 
erful (if vocally not always equally 
so) in the title role, and Mark Elder 
an excellent conductor. (838 3161). 

Continued on Page 23 


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Cinema/Ann Totterdell 

Charismatic combination of elegance and violence 

Hie Untouchables directed by Bri- 
an De Palma 

The Night is Young directed byLe- 
os Carax 

Every Tbne We Say Goodbye direct- 
ed by Moshe Mizrahi 
Miss Mary directed by Maria Luisa 

Bamberg ... 

Even without the gift of 
Prohibition there would have 
been enough to occupy At 
Capone in Chicago In the Twen- 
ties and Thirties, but convicting 
him and ending bootlegging was 
the well documented obsession 
of Federal Treasury agent Eliot 
Nesa (Kevin Costner). This is 
ground that has been covered 
many times before, in Ness's 
memoirs, in other films, and in 
the . television series that 
Inspired director Brian Be 
Palma and writer David 
Mamet They have made it their 
business not only to retell the 
story of The. Untouchables but 
to do so with a traditional 
directness and simplicity. 

Supported by a police force 
that has been bought and. paid 
for by Capone, Ness’s crusade 
to curtail the bootlegging 
industry gets nowhere unto he 
recruits a handful of incorrup- 
tible men, a hopelessly small 
group sustained by its distaste 
for a society controlled by 
money. It is the one failing of 
a superbly made fibs that it 
never suggests why these men 
are so morally superior to their 

“It's the law.” says Ness, when 
asked his opinion of Prohibi- 
tion, though more accurately it 
is the bending of any law by- 
intimidation and bribery that 
offends him. He soldiers on 
when everyone else has thrown 
in the towel but why this other- 
wise colourless' man baa such 
tenacity we never know. 

Capone, as played by Robert 
Be Niro, is easier to understand 
—a man who relies as much mi 
his charm as his power, the 

gangster as 'media celebrity, 
effortlessly- deflecting compro- 
mising questions at his fre- 
quent press conferences. 

“Team spirit,’* he intones 
like a sports coach delivering 
a pep talk ns he batters an un- 
successful henchman to death 
with a baseball bat 

The image of the dead man’s 
blood seeping across an expanse 
of- white table doth watched by 
stunned, dinner-suited gang 
members typifies the combina- 
tion of elegance and violence 
that is Be Palma’s Capone — 
stylish, charismatic and re- 

Kevin Costner has a harder 
time of it with the barely 
flexible character of Ness; he 
does not have a hope against 
Sean Connery as Malone, the 
tough, gruff Irish cop who 
becomes his mentor, or Charles 
Martin Smith as Oscar Wallace, 
brought in to investigate 
Capone’s tax evasion, and 
roped in by default In fact 
Wallace’s aggrieved accoun- 
tant’s view: “He hasn't filed 
an income tax return since 
1928!” probably provides a 
more tangible motivation than 

De Palma and Mamet be- 

tween them have an Impressive 
track record of physical and 
emotional violence in their 
work (Carrie, The Postman 
Always Rings Twice respec- 
tively) and The Untouchables 

though rarely explicit has a 
tremendous sense of violence 
often lifted by the exhilaration 
of good triumphing over evil. 
It must be a sad sign of our 
times that such simple drives 
are no longer quite enough. 


In Paris in the near future 
a pair of petty crooks who have 
not learnt horn Capone that 
crime does not pay persuade 

Scene from "The Untouchables Al Capone’s adversaries 
Charles Martin Smith, Kevin Costner, Sean Connery and Andy Garda 

the taciturn Alex (Denis 
Lavzrnt) to replace his dead 
father in an attempt to steal a 
rare vaccine. Too blatantly a 
device to show the young man's 
sense of isolation the plot of 
The Night is Young is ham- 
pered by over-literary sub- 
titled dialogue and an excess 
of brooding from Alex which 
is occasionally and hearteningly 
vitalised by director Leas 
Carax’s extraordinary images: a 
girl’s parachute catches on the 
door of the plane as she is 
about to jump; Alex climbs 
along the straps to release her 
and clinging together the two 
gently float to earth. . . . Later 
doubled up with pain he stag- 
gers down a street — recovering 
he runs, dances, somersaults, 
racing with the camera. But 
these spasmodically exciting 
moments cannot save a film 
that too frequently seems to 
parody a languid, philosophical 
mood rather than create one. 

Alex is tiresome, the two 
women he loves are infuriat- 
ingly passive. More of a calling 
card than a satisfying film in 
its own right, but we can still 
speculate that since Carax is 
still only 26 he may eventually 
resist self indulgence and pro- 
duce something splendid. 


That hope cannot be extended 
to Moshe Mizrahi, writer and 
director of Every Time We Say 
Goodbye, a wartime romance 
set in Jerusalem which has 
American Tom Hanks as an 
RAF pilot falling in love with 
a Sephardic Jewess. Mr Hanks 
had a much better time of it 
in Splash when he fell In love 
with a mermaid, but then she 
did not have a protective and 
hostile family determined to 
keep her in the fold. A valid If 
familiar story of love conquer- 
ing all. but irretrievably ham- 
pered by a leaden script and 
unimaginitive direction. 

Cultures clash — or collude — 
more effectively in Mist Mary 

An Argentinian film directed by 
a woman (Maria Luisa Bem- 
berg) would have been almost 
unthinkable to the South 
American women it portrays; 
women still as safe, in 1938, 
from their own country’s poli- 
tical upheavals as they are from 
the iminent war in Europe. It 
would have been as Incredible 
to Miss Mazy (Jufte Christie), 
the English governess hired by 
a wealthy Buenos Aires couple 
to turn their two young 
daughters into English ladies. 

Escaping the war as well as 
her own emotions Mary brings 
with her an almost Victorian 
repressive nature that has a 
fbrmularised response for every 
occasion. “Because it isn’t 
done." “Because you axe not 
to.” “ Ask no questions and 
youH get no lies. 1 * Even: “Little 
girls should be seen and not 

The worship of English man- 
ners and values at the expense 
of what we think of as the 
exuberant Latin temperament 
proves a disastrous course. Miss 
Mary's two charges are headed 
for disaster— one for a loveless 
marriage, the other for discreet 
insanity, sitting alone day after 
day copy typing the telephone 
directory with two fingers. Miss 
Mazy herself, in a rare human 
moment, is seduced by the son 
of the house and is promptly 
banished like a Victorian kit- 
chen maid. 

The film is a sad glimpse of 
a half lost world, a place where 
everything was stiff and forced. 
Unfortunately that stiffness in- 
vades the fabric of the 6*™. 
Even Julie Christie’s perfor- 
mance lacks sympathy. Mies 
Mary pities her employers’ 
empty lives while scarcely recog- 
nising the emptiness of her 

When Maria Luisa Bemberg 
set out to expose the sterility 
of the Argentinian tipper classes 
did she also mean to impale 
the inadequacies of their role 
models? Ask no question and j 
you will get no lies. ; 

Neumeier’s look for Ravel and Stravinsky! Rambert coUaborauon/RiversMe 

The Teatro Grande- at Pom- 
peii provided a grandiose setting 
for the double-bill presented by 
the Hamburg Ballet as the 
dance contribution to the Pants- 
tenee Pompeumc, a festival now 
in its second year, ' 

Music Is the keynote at Pom- 
peii, and It remained so during 
the ballet p ro g r a mme, which 
consisted of two 20th century 
musical ' masterpieces* Ravel's 

works seen at Pompeii, both 
made in the 1970s, his aim is 
not so much to bring the char- 
acters and situations nearer to 
a contemporary audience, but to 
cast them more in a personal 
mould, to satisfy himself and 
bzs company. 

He sets the Ravel ballet in 
1912, the- year of its first per- 
formance by Diaghilev’s Ballets 
Russes (one may safely assume 

ceived, and well executed by 
Colleen Scott, in an attractive 
G reek-style costume. Rose’s 
costumes are nearly all admir- 
able, with those for the nymphs 
outstanding. Their wigs, flow- 
ing tunics and movements based 
on friezes are the most satisfy- 
ing feature of Neumeier’s ver- 
sion, which is exceptionally well 

There are dramatic lighting 

received their full due from the . 
Orchestra National de France 
under Lorln Maazel. who con- 
ducted from memory with 
greater assurance than many a 
conductor armed with the score. 
The wordless chorus was sup- 
plied by the Slovak Philhar- 
monic Choir from Bratislava. 

H the surroundings did not 
detract from the music, they 
dictated the jettisoning of 
Jurgen Rose’s sets for both 
works, as well as alterations In 
the lighting and sometimes the 
movements. On the other hand, 
the stage is gratifyingly large, 
and if the disparity between 
Greek and Roman antiquity is 
overlooked, the crumbling wall 
in the background, with the 
ancient shadowy trees beyond, 
and a few statues skilfully dis- 
posed, the natural scenery 
serves well enough for Daphnis 
and Chloe; The Firebird is 
another matter: I imagine that 
Netunefer’s reworking looks 
better in a normal theatre. 

A glance at a list of 
Neumeier’s ballets shows that 
the reworkings, usually an- 
chored to great music, outnum- 
ber the creations. In the two 

(luvlvu, proa UUI 

much adulation as Maazel, but chef — a bazarre machine-like 
he had competition from Kar- dictator-figure on stilts — and 

! 9 Ml, * Ail AC . 4 La ran«4rlhl ev M(l T 

lie **"” WH w- — — — 

savizxa and Nijinsky, as well as the Firebird's sparkling cap. I 
Fokine). A girl and boy in a am grateful to Neumeier for 
patty of students diligently retaining a female Firebird 

Freda Ktt reports on the Hamburg Ballet’s 
programme at the second Panatenee 
Pompeiane festival 

visiting Lesbos with a guide 
are identified with Dapbnis and 
Oiloe. The boy dreams about 
the nymphs, ana the girl being 
carried off by pirates. 

How full of dreams and trans- 
formations Neumeier’s story 
ballets are! Gig Hyatt, a stylish 
in a generally strong 
company, made a winning girl 
and Jeffrey Kirii a solemnly 
dreamy boy. Dorkon, a Greek 
sailor, is vulgarly showy rather 
th an boorish and as be per- 
forms what was originally a solo 
demanding Chloe’ s attentions 
with a group of mates, and 
■‘Daphnis” Is alone on stage for 
most of his successive solo, the 
competition motif is lost. The 
role of Lykanion is well con? 

(Bettrna Beckmann), but the 
role Is a strangely terre-&4erre 
one. Both she and the girl who 
replaces the princess (Anna 
Grabka) frequently perform 
rather self-conscious turned-up 
foot movements that are at odds 
with the music. The young 
soldier Ivan (Ivan LiSka) has 
too' indeterminate a role. The 
f^ ln g is heavily symbolic, with 
the tiny plant cherished by the 
girl grown into a sapling, while 
she and Ivan watch ecstatically 
as water gushes from a seeming 
spring in the rock, cu nn in gl y 
devised by Neumeier. 

Both works involve a super- 
natural intervention that re- 
solves the central drama, with 
a dosing ensemble in Which 

the. music teaches a crescendo: 
tiie majestic wedding apotheosis 
in The Firebird and the re- 
join rings of Daphnis, Chloe and 
their friends in the Ravel ballet 
Unlike Fokine. Neumeier 
ignores the religious element 
and ends both works with a 
pas de deux, banishing the 
corps. In the Ravel ballet the 
climax is a sexual one, with 
Daphnis profiting from his 
Lykanion — so 

married girl from the town 
in Ashton's lovely ballet 

Neumeier has been much in 
demand and much in view this 
summer, both with and without 
the Hamburg dancers. In Paris 
in June, the Theatre do la Ville 
presented three of hla long 
Shakespeare ballets, a well- 
conceived programme of ex- 
cerpts called “Shakespeare’s 
Lovers," an Arthurian epic and 
a selection of his Mahler ballets. 
At the Avignon Festival the 
Paris Opera Ballet danced his 
new Magnificat, which will 
arrive in Pans this autumn, and 
bis Streetcar Named Desire for 
Marcia Haydee and Richard 
Cragnn and die Stuttgart Ballet 
opened tids year’s Festival of 
Two Worlds at Spoleto. 

The two ballets given at 
Pompeii exemplify Neumeier’s 
tendency to overload bis works 
with characters and events. He 
is certainly a ballet director and 
choreographer to take seriously, 
and if he learns to pare down 
and simplify be may yet sur- 
prise us with a masterpiece and 
become as popular in Ms native 
America and in Britain as he 
already is on the continent 

Clement Crisp 

When Ballet Rambert was 
re-formed as a modern company 
in 1966, one of its first innova- 
tions was a series of experi- 
mental evenings encouraging 
new creativity from members 
of the company in collabora- 
tion with painters and musi- 
cians. Four such collaborative 
exercises took place; two 
decades later the troupe has 
been re-named the Rambert 
Dance Company, and to mark 
the occasion a further set of 
Collaborations, the fifth, is 
being held at Riverside Studios 
this week. 

Ten new works were on view 
on Wednesday evening, sev- 
eral of them the tenderest 
choreographic shoots. Stand- 
ards of presentation ranged 
from the pertunctory to the 
stylish, but first praise must go 
to the quality of the musical 
accompaniment, much of it 
performed live, and with two 
commissioned scores — by 
Nicholas Wilson and Peter 
Muir — of more than passing 

There was implicit in Che 
evening the idea of an exten- 
sion of the Rambert braefettioa 
of involving fine artists in the 
decoration of dance. Hence the 
invitation Co John Murphy, 
Richard Deacon and Anssh 
Kapoor to provide settings. The 
most successful of these, and 
the one visual delight of the 
evening, was Mr Kapoor's 
intense, luminous purple back- 
drop for Amanda Britt oil’s The 

Second Construction. The piece 
was theatrically commu nicat ive 
— many of the other o ff ering s 
were so setfubsozfced and so 
introspective as to suggest that 
they were personal therapy 
rafter than choreography— and 
very wefl integrated in its 

The particularly Indian colo- 
ration of set and design, a 
mysterious violet penumbra pro- 
duced by imaginative lighting, 
the pentatonic clangour at the 
John Cage score which gives 
the piece Its tide, and Miss 
Britton's passing choreographic 
references to Indian dancing, 
produced an atmosphere, a per- 
sonal and coherent vision, that 
is the tadhnwk of su c cessful 

One oilier piece must be men- 
tioned: Gary Lambert’s solo for 
himself. One Love, which is 
danced to a poem by Linton 
Kwesi Johnson. The verse, I 
suspect, matters not at all; what 
is so exciting is the vigour and 
daring of Mr Lamberrs move- 
ment and the bright curlicues 
of energy, the cut and thrrust 
of technical power with which 
he flings the dance at us. Here 
was an emotional and physical 
involvement— a sense of theatre 
—sadly lacking in most of the 
other novelties. 

Bnt the evening asserted that 
creative liveliness on the part 
of the Rambert company which 
has ever been part of its 
identity. Names may change; 
the artistic spirit endures. 

I Arts Week 

j Continued from Page 22 


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Tamw Vasaiy, p‘'»™ sod director wltii 
the Peterborough String Orchestra. 
Haydn. Mozart and Larsson. Queen 
Elizabeth Hril (Toe). (928 3191). 
London Symphony Orchestra and 
Chorus conducted by Larin Maazel, 
Mahler 2. Barbican Hall (Toe). 

of St Martin-ta-thc-FieWs 

oiwKinli la directed by Ken- 
neth Siilitn. Mfendehsnlm and Schu- 
bert Queen EHzahwth Hall (Wed). 

London Philharmonic conducted by 
Wmw Tennstedt with Manrizio PsS- 
lini, piano. Webern, Beethoven and 
Brahma. Royal Festival H a l l (Tfaur). 

. (8283191). 

ed by Lorin MaazeL Mahler 5. Barb- 
ican Hall (Thor). 

Orchestra PhHhnnmmique de Mont 
pettier Ianguadoc-Boustillon eon- 
Sorted by Cyril Diederich, Monlpri- 
fiar Ouera Choir, Orfeo Cateln 
CtaniSta fTue). SaQe Ptoyd 

Nh^or^Zabfllria, bmp, Monique 

Frasca-Colombier, viotiu and alto, 

Debussy. Parish-Ahmw, BaftHbe). 
Saint-Severin Church (45K 7955). 

Orchestra National de Ranee conduct 
ed fay Ganges Pretre, Barbara Hen- 
dricks, Florence Qnivar, Jean- Phi- 
lippe Courtis: Benvenuto Celfini in 
concert version (Wed). Thea tre des 
Champs EZyseea (4720 3637). 

Nonrel Orchestra Philhanomiiqtte 
conducted fay Maxek Janowskh Web- 
er, Mendelssohn, Saint-Saens 
(Thur). Theatre des Champs Elysees 

Orchestra National de lT)e de France 
conducted by Jacques Merrier, 
Choir Are Musicae: Debussy, Ravel. 
Schmitt (Thur). Salle Pleyel 

. (4361 0630). 

En se mb le Orchestral de Faria con- 
ducted by Philippe Herreweghe, 
Frederic Pelassy, violin, Choeor de 
la ChapeOe Royal e, Collegium Vo- 
cals de Gand: Mendelssohn (Thur). 
Theatre de la Sorbonne (4562 6757). 

MOaiii Teatro Alla Scala: Rafael Friib- 
Vmm* de Burgos conducting Haydn, 
Ravel with pianist Alicia de Lanoo 
ha, and Bartok (Wed and Thur). 

Florence: Teatro Cormmale: Israel 
Philharmonic Orchestra conducted 
by 7»thm Mehta, Prokofiev and 
Tchaikovsky (Mon and Tue). 



i meten. attmea w mw i w^- 

duriang the Rotterdam PhUhannon- 
ic, with TM a Davidovich, piano: 
Biedstra, Tchaikovsky, Berlioz 
(Ihur). Recital Hall: The Nether- 
lands Brass Quintet Ewald, For- 

aytb, Bach, Pachelbel, Scarlatti, 
Rossini (The). (413 2490). 

conducting the North Holland PhU- 
* harmonic: Bernstein, ’MiUiaihI, Biz- 
et, Smetana, Roasixii, Borodin 
(Wed). Antoni RosMarba conduct- 
ing the Netherlands Philharmonic; 
with Alexander Rudln, celkx Mo* 
zart, Haydn, Schubert (Thur). 

The Hague, Dr Anton Philipsza&L The 
Netherlands Philharmonic Cham- 
ber Ensemble under Vladimir Splv- 
a&v, violin: Denisov, Mozart, 
Haydn, Schubert (Mon). (609 810). 


National Symphony (Concert HhTI) - 
Mstislav Rostropovich conducting. 
Gary H o ff man WTIq^ David Evitts 
baritone, William Neil organ with 
Oratorio Society of Washington di- 
rected by Robert Shafer. Carter, Pis- 
ton, Copland. W. Scfamnan (Tue); 
-Mstislav Rostropovich conducting. 
Toch, Mozart, Berfioz (Thur). Ken- 
nedy Center (254 3776). 


Carnegie Halt Vienna Philharmonic. 
Leonard Bernstein conducting, 
Christa Ludwig mezzo-soprano. 
Bernstein, Mozart, Sibelius (Thur). 
(247 7800). 

Juflfiari Sym phftny (Jiiffliwrl ScbOOl); 
Sfarien Fhriinp (flndu c ting, Beethov* 
en, Sibelius (Wed). Lincoln Center. 
Mexfcln Hall (Goodman House); Roger 
Press piano recital. Franck, Robert 
Casadesus, Rachmaninoff. Chopin, 
Prokofiev (Mon). 67th w. of Broad- 
way (382 8719). 

H aufarara Haifa Jeffrey Siegel piano 
recital. Brahms, Liszt, Gershwin 
(Tue). 1395 Lexington Av. (831 8803). 

New York FUBunnoidc (Avery Fisher 
Hall): Sr Cofin Davis conducting 
Berlioz (Thor); Sir Odin Davis con- 
rhiffB-ntf- Sihoiiim and VuxfdiBn WHS- 
»m (Tue). Lincoln Center 
(874 2424). 


Chicago Synmhocgr (Orchestra Hall): 
Sr Georg Sohi conducting, Murray 
Rerahia piano. Bartok, Schumann, 
Tchaikovsky (ihur). (485 8121). 


Ttokyo M etrop olitan Symphony Or- 
chestra, conducted fay Jean FQurnet. 
Ravel and SaintrSa&is. Suntory 
Hall Mon). (B22 0727). 

Tannin Nippon Orchestra cond ucte d 
by Heinz Rogner. Strauss, Ravel, 
Brahms. Tokyo knwi Nenldn HalL 
Shinjoku (Toe). (Z70 6191). 

Tokyo Ffcabuuwifc: Orchest r a, con- 
ducted by T. Otaka with Nai Yuan 
Hu, violin. RrnAnec. 

Suntory Hall (Tue). (256 96981 

New Jnp»" Wnthun nialc Orchestra 
conducted by Seiji Ozawa with Vik- 
toria Mullova, violin. AD- Brahms 
programme. Suntory Wall (Thnr). 

Kammer Orchestra Berfin, conductor 
Wiling Schnnlr; oboe, Jurgen Abft 
Bach. Hitoal Han, Shows Women's 
College, Sangenjaya (Thur). 


Michael Coveney 

Groucho: A Life In Benue U 
a modest jog through the out- 
lines of Groucho ’s career 
illuminated by a brilliant Im- 
personation, just about the best 
of the great number I have seen, 
including my own. The young 
American actor Frank Ferrante 
comes laden with the approval 
of the Marx industry and rela- 
tions. Grouoho’s son, Arthur 
Marx, Is the co-director (with 
Richard Can-others). 

One can hardly complain that 
this is a laundered version of 
the truth since that is all that 
was ever made available, by 
Groucho himself and other 
hagiographers. The persona 
was so manufactured that any 
good goon can have a go at it. 

Mr Ferrante is a cut above 
that He takes over a senile 
recording at Carnegie Hall and 
whisks us back to East 93rd 
Street hardship— “We were so 
poor even my parents had to 
share the same bed" — and the 
translation of vaudeville 
routines into the early films. 
He envies Chico his string of 
romantic conquests— “Since I 
was getting nowhere with the 
girls I derided to get married.” 

The script by Arthur Marx 
and Robert Fisher is best at re- 
locating the characters and sight 
gags in the old music balL it 
grinds to a halt when offering 
analysis of Groucho's depend- 
ence on his brothers, his pro- 
neness to Insomnia and, worst 
of all, his sentimental geriatric 
apologia in the form of a 
Playboy interview executed by 
Mr Ferrante In beret, white 
polo neck and arthritic ges- 
tures. It is hereabouts yon re- 
alise the show has nothing 
much to say about anything at 
all, least of all Groucho. You 
ponder, too, the striking resem- 
blance of Ferrante’s -Groucho 
not so much to Groucho as to 
Harold Pinter as impersonated 
by Eric Idle, a jocund concept 
in the duller moments. 

That interviewer is the 
daughter of a magazine journal- 
ist who wheedles out of 
Groucho the full leering lecher- 
ous lap-bombing that so rarely 
had positive results. By now 
Captain Spaulding has stomped 
among us, with twirling legs 
and trembling cigar (“ If s 
bigamy,” “It's bigamy, too." 
“If a big of all of us” is edited 

Frank Ferrante 

down to the funny two thirds), 
the only character Mr Ferrante 
essays after applying the paint- 
on moustache and the wire- 
rimmed spectacles to his face 
and a dutiful round of applause. 
Rufus T. Krefly and Otis B 
Driftwood are dropped in favour 
of over-long TV show routines 
and climatic navel-introspection 
in which Groucho comes to 
regret that he ever sprung free 
from his brothers even allowing 
for the huge increase in 

Gummo and Zeppo are virtu- 
ally erased from the tale, but 
Chico and Harpo are filled in 
with an ecstatic brilliance equal 
to Mr Ferrante's by Les 
Marsden. Mr Marsden executes 
two seraphic musical interludes 
on harp and piano that are 
alone worth the price of ad- 
mission, even if they take the 
show nowhere. 

But Groucho needed to give 
insults to people who deserved 
them and, whatever one felt 
about the first night audience, 
they did not really ask for it. 
Even Marguerite Lowell, sport- 
ingly playing the peripheral 
women, was nothing like Mar- 
garet Dumont. Thus Mr Fer- 
rante’s exertions amount to 
little more than a turn. A turn 
for the better, but a turn just 
the same. 

Mn. J 

iPmp*-' -:;:f r :; ' 


* * ; >f • ?! is&'f " 

- :: ' A 

Karen GledhlD 

The Innocent Mistress/Derby 

Martin Hoyle 

\ fBQBB Utt Shin-md Bosin 
story-telling aa m i ii i n i u ed by sha- 
jmsen, banjo-fike instrument Solo- 
ist Tsuchiyo FnjimatSL MBtsu koahi 
Theatre (Wed). (241 33U). 

. ifyou work in THE NETHERLANDS call Richard Wiffis 0 Amsterdam (020) 239430 

The first professional produc- 
tion, at Derby Playhouse, for 
290 years of this comedy by 
Mary Pix, one of the late 
Restoration “ she-wits " throws 
up a piece no better or worse 
than countless other second. 
rankers. That is to say it lacks 
the bite of Congreve or 
Wycherley and instead antici- 
pates the sentimental bourgeois 
humour of Sheridan. 

Unlike last year's Country 
Wife at Manchester this produc- 
tion lacks cruelty and cynicism. 
How much of this is due .to 
Annie Castledine’s blunt bluff 
direction and some very erratic 
acting is hard to tell. A romp 
seems intended; arid such 
serious strands of plot as exist 
are soon lost perhaps because 
the high-principled heroine of 
the title is wooden and 
monotonous, and Johnny 
Worthy, though he doubles as a 
perky black cockney servant is 
utterly unconvincing as the 
: married man who inspires her 
virtuously suppressed passion. 

The comedy relies oo fami- 
! liar elements: fortune-hunters, 
who trick heiresses into marri- 
age, false letters of assignation, 
rakes who finally fall in love. 
We meet a comic dragon ripe 
for hoodwinking whose theatri- 
cal progeny will include 
Mines Hardcastle and Mala- 
prop— nicely played by Marlene 
Sidaway, an aptly sturdy 
mother to Charlotte Barker's 

dumpy cake-scoffing heiress. In 
Bill Pinner’s set we also meet 
some vigorous goldfish whose 
enraged attack on the pretty 
paper boats floating in the real 
fountain made me wish that 
their energy would rub off on 
the human cast 

The men come off the worst, 
for the most part sheepish or 
stilted. They are the chief sin- 
ners in the evening's slow pace, 
not helped by musical inter- 
ludes, lengthy and usually 
minor key. that break up the 
narrative just when it despera- 
tely needs speed and coherence 
After 50 minutes Stifyn Parri, 
faintly echoing Frankie 
Howerd, turns to us with, “now, 
everyone sitting comfortably? 
More plot coming up. Concen- 
trate please.” An admission of 
defeat; too little too late. 

The production never settles 
on a style. The serious 
romantic interest is limp and 
listless, the humour uncertain 
whether to opt for slapstick (an 
amorous • husband enters, 
trousers round his ankles) or 
the high style that some of the 
actresses at least are capable oL 
They include Liz Rothschild 
whose wit, point and buoyancy 
recall the young Elizabeth 
Spriggs; and - Shelley King 
whose attack, elegance and pro- 
jection lift her above most of 
her colleagues— -so me of whom 
are patently wondering what 
they are doing. 


Financial Times Friday September 18 1987 


Telegrams: Fmantimo, London PS4. Telex: 8954871 
Telephone: 01-2488000 

Friday September 18 1987 

The presidency 
in Mexico 

THE Mexican political estab- 
lishment is in the final throes 
of its unique ritual of choosing 
the next presidential candidate. 
The choice of the successor to 
President Miguel de la Madrid 
from this cabalistic process 
could be announced as soon as 
next week. 

The unprecedented effort to 
give an impression of a genuine 
contest cannot disguise the way 
everything has taken olace 
within the closed ranks of the 
ruling party, the PR1, subject 
to little public scrutiny. The 
successful candidate will be 
presented as a fait accompli. 
and there can be no real 
challenger, despite the ensuing 
election. The field of ” official " 
candidates has been narrowed 
down to three from six. None 
would disgrace a presidential 
platform in Latin America but 
they all represent the PR1 
system which has refused to 
accept any challenge to its 
monopoly of power since the 
Revolution and which this 
year has cold-shouldered a 
movement for internal reform, 
the so-called Democratic Cur- 
rent The PHI establishment 
still thinks it knows what is 
best for Mexico and com- 
placently relies on Its own 
capacity for change, a capacity 
which has begun to look in- 
creasingly questionable. 

Structural reforms 

The person selected will be 
the single most important influ- 
ence in determining the 
direction of Mexico throughout 
the nineties. This decade could 
decide whether Mexico is 
capable of bridging the gap 
between a developing and a 
developed economy, and 
whether the country’s political 
system can be modernised with- 
out turmoil. 

The de la Madrid presidency 
has been an era almost totally 
absorbed with the management 
of the debt crisis. The next first 
citizen must not only focus on 
debt and the sound economic 
structural reforms which have 
been set In motion, but also 
address the need to open up the 
political system. 

The president sits atop a 
pyramid of authority with 
virtually unlimited power. The 
greatest weakness of President 

de la Madrid has been his in- 
ability to galvanise the bureau- 
cracy of state and party (often 
interchangeable) and so make 
full use of this power to achieve 
his goals which have been both 
sound and honourable. He bas 
been a cautious president, 
eschewing populism which so 
often in the past has been the 
downfall of Mexican leaders. 
However, his caution has seen 
him draw back from bis pro- 
mise of a more open political 
debate. Whenever elections 
have been held the accusations 
of vote-rigging have ran un- 
comfortably true. 

US threat to 
open trade 

WHEN the Governors of the 
IMF and World Bank meet in 
Washington the week after 
next, they will do so under the 
shadow cast by the Capitol. 
That shadow will be parti- 
cularly deep this year, since 
Congress is about to produce a 
trade bill that might under- 
mine all tiie efforts of these 
organisations to persuade the 
developing countries of the 
advantages of outward-looking 
trade policies. 

How can one persuade the 
governments of developing 
countries of the merits of 
greater openness to inter- 
national trade when the US 
itself bas lost that faith? The 
American justification is the 
state of the balance of pay- 
ments, but many developing 
countries have still more un- 
manageable imbalances or, 
worse, have paid a huge price 
lor achieving balance. 

The rise of protectionism in 
the developed countries bas 
come at a time when the intel- 
lectual case against the export 
pessimism of developing coun- 
tries is ever better understood, 
as was shown by the World 
Bank's World Development 
Report 1987. An essay just 
published by the Trade Policy 
Research Centre in London, 
Sfytha and Reality of External 
Constraints on Development by 
Professor James Riedel, sheds 
more tight on what is wrong 
with the traditional export pes- 
simism. Such pessimism, he 
notes, usually follows from a 
mechanistic view of the world 

Gay de Jonqnieres says that for companies, the ECs plan for a single market 
^ may mean less than some of them claim £ 


.SN\\» ^ — VJ, 

avV rfSSJBl 

Reasonable surplus 

Against this, he has behaved 
responsibly towards Mexico's 
creditors and bas tuck with an 
austerity policy despite con- 
siderable unpopularity. He can 
also take credit for pushing 
Mexico into the GATT and for 
setting in motion a fundamental 
shift towards a more liberal 
and export orientated economy 
not so dangerously dependent 
upon one source of income, oil. 

It is indeed a remarkable 
contrast to see the extra- 
ordinary boom in the Mexican 
stock market (up over 500 per 
cent this year), reflecting 
genuine private sector confi- 
dence at the onset of his final 
year in office, compared to the 
gathering gloom and later panic 
as his predecessor nationalised 
the banks at the onset of the 
debt crisis. Mexico’s huge debt 
burden now looks more 
manageable than either that of 
Argentina or Brazil. The cur- 
rent account is back to a reason- 
able surplus, private capital is 
being repatriated and reserves 
have accumulated to an 
embarrassingly large $I4bn. 

The government most at all 
costs avoid the temptation to 
use these reserves to splash out 
in the final presidential year to 
buy new loyalty for' the PRI 
and the incoming President 
The element worrying Mexico’s 
creditors, so impressed by the 
turn-round in the external 
account, is an accelerating in- 
flation without real evidence of 
renewed domestic growth. 
Keeping inflation under control 
must be the major priority In 
the coming months. 

L ate last jxine, a bevy JLU 

of European business 
leaders converged on the 
summit meeting of European 
Community heads of govern- 
ment in Brussels to vent their 
collective impatience at the 
slow progress towards Com- 
munity integration. i WbWlllkWMJW'IIBtltfi'fN 

Heading their list of com* | 

plaints were delays in pushing J 

through the EC's ambitious <*«»*■■■ * Jf //J/V/f • ft ) 

programme to create a single vvW> WfSlWjffmmm 

market by sweeping away all ... ... 

internal obstacles to trade by >>' ra? 

1982. Without decisive action, — 

they insisted, Europe’s future yJA 

growth, prosperity and competi- ss^ vMl ' 4 

tilveness would be imperilled. "Sg-arv 

This high-level lobbying *■«&**. tlL, 

exercise — organised by the ... ?***.- 
Roundtable of European Indus- N 

trialists, a select club of 30 VvVVVliai 
blue-chip companies — un- ^ 1 t \ MlVt 

doubtediy succeeded in convey- '111 f WS jia 1 I 

iug the message that top , /\ l A Wml%\ J 

managers are itching with j, //\ A /A WmmiX/ 

frustration at the red tape and . % '//v/r/A Kalita? lit 
nationalistic fragmentation of Ivf y'— ^ W (/ft 

Europe's un-common market 

Yet despite this display of s*— * 

common purpose, views in _l 

European industry differ 

sharply about how much the fOSjg®| _ 

specific barriers which the EC 

programme sets out to attack S. wL&SFrr 

really matter. Even among the 

Roundtable's members (accord- 

ing to one of them) there are 

" shades of opinion " about what isXNii 

needs to be done. L_ * 

Philips, the large Hutch elec- 
tronics group, is a long-standing 

campaigner for the internal ■ ■ __ 

market programme and con- g K ^ 

ttaues to stress that it Is crucial 

to the company’s corporate ■ M U M ■ a 1 

strategy. But at West Germany's m 

Siemens, also a European elec- 
tronics leader, attitudes are 

more low-key: “ Yes, the topic # 

comes up internally," says one — 

I executive. "It’s one of a num- VWb ■ I 

ber we discuss. There are many ■ ■ ■ ■ I 

others." lilll 

Furthermore, some large 
chemicals companies, such as 

West Germany's Bayer and ■anmaaMMaHi 
Britain's IC1, say that, irritating „ ... _ 

as EC hurdles are, they have and persistence within the 






f\ 3§ 





Bursting barriers of 

mind and matter 

Mr Andie Herder, chairman of 
La Radiotechnique, Fhillpsr 
affiliate in France, points out, 
its carefully cultivated Image 
as a patriotic ** local ” company 
is vital to doing business, par- 
ticularly when bidding fur 
government contracts. - “It’s 
good politics. Philips’s genius 
has been to allow us to keep 
our specific national identity, 1 * 
he says. _ J 

The most striking signs of a 
more " European ” approach by 
industry is the recent surge of 
cross-frontier takeovers, such 
as the CGE-XTT deal and a 
string of acquisitions by Italian 
entrepreneurs led by Mr d€ 
Beaedetti and Mr Raul Gardint 

Same companies, notably 
Moet-Eennessy and Peugeot, 
are reorganising their manage- 
ment or seeking to expand their 
distribution channels so as to 
position , themselves better in 
EC markets. Britain’s ZCL com- 
puter company has announced 
plans to o pen its first plant on 
the continent.. 

However, even in France, 
where the government has 
mobilised a massive publicity 
campaign around 1992, such 
moves are rare. Furthermore, 
according to industry ministry 
officials, awareness remains low 
among the country’s thousands 
of small and medhim-sized firms. 
In Britain, several large com- 
panies such as BAT, ICI and 
GKN are taking a close interest 
in the internal market pro- 
gramme# But according to Mr 
John Scutes, international 
director of the Confederation 
of British Industry, “There’S 
a vast spread of people who 
know nothing at all about it. 

In West Germany, those com- 
panies which are not Indifferent 
to the programme appear 
supremely assured of their 
ability to cope with it There 
is a widespread conviction for 
an industry with a phenomenal 
export performance across the 
globe, selling in Europe is a 

BS - “WtoifeTpeSS?, ^t^S^Sgrfrom this that ^ra5Tbie"> markets ” wire ^pro^urei whfltein ^ny SSnhSi tf'^xteind reto- 

where do you havT specific the internal market programme opened," says Mr Graham types of consamer goods there dustnalist Mr Carlo de Bene- ttoM at BMW. 

problems which would be is unlikely to have more than a Anderson, deputy chairman of is a proliferation of different dettu However, even the most self- 

solvedby the EC programme, marginal impact would almost Britain’s NEL a leading power natumal requirements for label- Mr Andre Heto,a director west German corn- 

answers tend to get a bit thin," certainly be wrong. That many engineering company. He does ling and packaging and. some- ge»^ of Krnum p^es insist that a more open 

according to Mr Friedrich- companies expect it to make a not welcome the prospect, argu- times, PJ®* 1 ** specification. Mr internal market is unlikely to 

Wilhelm Pohlenz head of real difference is clear from ing that competing across the Alain Chevalier, dwurman of y ear *** be the same as an extended 

economic policy at Bayer. “My the quiet but determined re- EC would add to the company’s French luxury goods maker "*2® home market. “Some things 

■ l- .l- cantinD MMts withnni pnamntMmir snv Moet-Hennessv. savs that to sell GS, accepts that there is some ut#a nuummMt at+tfnrl*>s and 

"There would be immense 
competition, an enormous 

In pharmaceuticals, each Safart-Gobain glass group who America. 0 * Japanf’ it’s 
country insists on its own appro- now heads Ceres, the French game to gayg Dr Helmut 

impression that for the sistanee by industries seeking costs without guaranteeing any Moet-Hennessy. says that to sell Hke government attitudes and 

German chemical industry, to protect privileged positions new business. "AH European some of itt cosmetic lines institutional structures won’t 

c i. vuku u thai. hnma mg-iufc and mwpr utilities todav are throusiiont Europe, the com* barriers are important, but In .hanpa " «« nr Herbert Stich. 

Europe is already highly to their home markets, and power utilities today are through out Europe, the com* bar 

developed as a singlemarket." from dark warnings that US chauvinistic, and to a way all panyneek to hold three separ- the 

T#afaree Coonee the French and Japanese companies may national manufacturers bene- otesets of stock. to® 

coSSSf wNttti uS ba the only real toSete fit.” he sws. ® EC Conmaaton OTeea iBB 

: Tho sowritv of trade, barriers Financial services are to have a clearer idea of these C 

e sets of stock. much as a reason to do nofto 

The EC Commission expects bft" be says. 

are important, ran in change.” says Dr Herbert Stich. 
we stressed them too executive director of sales and 
a reason to do noth- marketing at Siemens. “We 
****• will still be thinking in terms 

biggest cement maker, takes a The severity of trade barriers 

On this view, the real test of of working on the Spanish or 

similar view. " There are no within the EC varies con- 
restrictions, nothing prevents siderably. Relatively few 
us from setting up plants market sectors are, in practice, 
wherever we like," says Mr completely dosed — though 
Jacques Lefevre, an executive those which are tend to be 
vice president. “ For ns, the economically important. The 
common market complete.” biggest is public procurement. 
Of 42 companies operating roughly 10 per cent of the Com? - 
in Europe surveyed by the mumty's gross domestic pro- 
American Chambers of Com- duct, where less th a n 10 per 
merce in 1985, 32 said they had cent of all business is put out 

another no-go area in much of costs later tills year, when it the internal market programme Italian markets, not a single 

may lie as much to its ability European market" 

The real test of the programme 
may lie in its ability 
to alter managers’ perceptions 

to alter managers’ perceptions others agree. “The idea of 

as to change^objective market a totally integrated European 
conditions. The Commission market is light years away, be- 

fear* that unless todratry is cause we have different cul- 
coimnced that the si n gle man tures, lifestyles and languages," 

ket wiR^becam e a re ality and according to Mr Neil Garrard, 
plans ahead accordingly, the a director of McKtosey. the 
impact of the initiative may be international management con- 


international management con- 
sultants. Mr Xavier de Moni- 

tor many managements, fgicon, planning director of 

iuiywucre m uie jnv, wuuc — '■“’■‘w, imciuauuum uuupeuuuu ju uiwv umsem mum Ttnninallv th« rtiflllpnpn man T TT r .1 itm 

fewer than half comirfained of transport and water-*are still Britain and France, restrictions rely partly on guesswork, how- writ. different EC 

delays at frontiers. West Ger- specifically excluded from the are crumbling much more ever one economist involved JiLJS skadVnttl naan mnl«- ® or £* I “P ort ?^ 

many’s chamber of industry and Rome Treaty provisions. slowly elsewhere. For example, in the study describes it as comply _ with 

lUdu; a cuouiuer ui iuuuouj uuu wuwy euenaeie. eoi m tiic auuy rnmne an In, tho . , 

commerce (DtHT) says it stop- Genuine opening here would it is still illegal for insurance " like trying to do a three dfc smari^r firm^CnmnanJps such 

ped polling its members on EC be bound to hasten restructuring companies based in one EC mensional jigsaw with half the n you 

trade obstacles in 1984 because of industries in which frag- country to sell policies in many pieces missing.” What it can- “ ^ Ca Swf iSf te m a ^ Ut i,wi h -* fiay5 ' 

it ceased getting replies. mented markets have bred others. not hope to discover is how S£"5Sn w ® rd , ent 

More generally, a recent duplication of capacity. Europe In most cases, however, cop- companies' behaviour will IumI ^,iH t ^ a ii market 

study of UK companies by the stiff has seven indigenous ing with intra-EC differences is change once obstacles are re- SSSTSS 6 disagree. 

British Overseas Trade Board makers of digital telephone largely a question of cost The moved, and whether more of at least * 

found that successful exporters, exchanges, compared with three motor industry carries a parti- them will be emboldened to dB J®** 

almost without exception, dls- in North America, In sower cnlaziy heavy burden, having to' treat the EC as one market products maimy for the mayneas muc*. in its ability 

almost without exception, dls- in North America. In power culariy heavy burden, having to' treat the EC as one market h rjr abuity 

missed customs formalities generation, even after the grapple with five different amis- Some critics argue that the “SSi 63 m wWc “ they ^ E uropean 

especially manufactures, where 
they contribute only a small 
part of world supply. It 1s com- 
petitiveness more than the 
growth of the markets that then 
matters. The more protectionist 
the developing country the less 
competitive its exports are 
likely to be. After all, Hong 
Kong alone exports more manu- 
facturers than all the countries 
of Latin America combined. 

The policy lesson to be 
drawn, however, is not tbat de- 
veloping countries must export 
at all costs. It is rather that 
their policy should not be biased 
against any particular market. 
Furthermore, it is always an 
anti-trade bias tbat needs justi- 
fication. After all, there is only 
one sub-Saharan developing 
country, Nigeria, that has a mar- 
ket for manufactured goods 
much larger than that of a 
middle-sized British town like 
Nottingham. Only four develop- 
ing countries have total markets 
for manufacturers significantly 
greater than those of Greater 

and other bureaucratic pro- recently agreed merger between sion standards and myriad other opportunities are already there, roe oDstaciw are 

cedures as no more than an Asea of Sweden and Brown national variations to govern- but that too few companies Though Philips, for example, a$ m its success 

administrative nuisance. The Boveri of Switzerland, it has ment regulations. “It all makes have had the vision and energy is seeking to rationalise its m enminat mg them, 

most serious barriers to sue- more than three times the for horrendous programme plan- to seize them. “Sheer pusil- European operations, it dare * £*' fau » ■***'« on caj* ttmno 

cess, the study concluded, were number of turbine and boiler ntog," Bays a Ford Europe lanimjty,” says Mr Alain Mine, not move too fast for fear of 8 - a tfi ea ana 

> xJ -r _ j- M.- TTC -r nar m j; nR i-- D i a- piocv win axanuno trana-Europoan 

industry that the obstacles are 
surmountable as in its succ ess 

lack of knowledge, commitment makers in the US. 


former finance director of the offending local sensitivities. As corponoammaa^ 

Beevor makes 
a round trip 

centre stage of French 

The former chairman of 
France’s powerful Compagnie 
Generale cTElectririte (CGE), 
who resigned just before the 
group was nationalised by the 
left to 1982, was chosen yester- 
day to replace Sir James Gold- 
smith at the top of Generate 
Occidental e. 

Sir James surprised everyone 
this summer when be sold his 
controlling interest to- Generate 
Occidentals, bis main French | 
company, to the recently 
privatised CGE. 

Ambroise Roux, now 66, 
appears to have played a major 
role in the CGE-Goldsmith trails- ! 
action. Indeed, when the Right 
returned to power in France 
last year, Roux also returned to 
CGE as a member of the tele- 
communications and heavy en- 
gineering group’s board. 

He will now be spearhead- 
ing CGE's . controversial new 
diversification into the media 
and other services through the 
Goldsmith deal. 

Many people say that Roux, 
one of the great secret fixers of 
the French business establish- 
ment has for some time been 
polling the strings inside CGE, 
a suggestion which irritates 
Pierre Suard. the current CGE 
chairman, appointed by the 
Right Wing government Iasi 

A dose friend of the late 
President Georges Pompidou, 
Roux is also close to Edouard 
Balladur, the current finance 
and economy minister who was 
secretary general at the Elysee 
Palace in the Pompidou years. 

The rotund and jovial Roux 
also Haims to . have good 
relations with President Mitter- 
rand — who Is believed to have 
consulted Roux on a number of 
occasions on delicate industrial 
and financial dossiers. 

economy, to which the growth 
of world demand is the sole 
determinant of the growth of 
exports from developing coun- 


Paradoxically perhaps, those 
who believe in this ” engine of 
growth” view of development 
almost always do so when com- 
plaining tbat the engine has 
broken down. They then argue 
that the developing countries 
should free themselves from 
the constraints of poor world 
economic growth by consciously 
shifting their growth towards 
their home market In this way. 
it is suggested, the “engine” 
will be modified to allow faster 

One striking development has 
undermined the “engine ' of 
growth" view and its implica- 
tions. That development is the 
diversification of developing 
country exports into products, 

Correct policy 

Neutrality is logically the cor- 
rect policy for almost all de- 
veloping countries individually. 
It is also the correct policy for 
all developing countries to- 
gether wherever their combined 
exports of a given product con- 
tributes a modest share of total 
world demand. Nevertheless, 
the growing protectionism of 
the developed countries Is likely 
to alter both reality and percep- 

So far as the reality is con- 
cerned, protection seems for- 
tunately to have been quite 
ineffective until now, with the 
volume of exports of manufac- 
tures from developing coun- 
tries growing at 8.4 per cent a 
year even in the 1980s, almost 
four times as fast as the growth 
of developed country markets. 
But perception is quite another 
matter. Awareness of protec- 
tionism in developed countries 
is becoming stronger in all 
developing countries. Conse- 
quently, the rewards of 
liberalisation look, at best, 
increasingly unattractive and, 
at worst, non-existent. A pro- 
tectionist trade act in the US 
would confirm all suspicions. It 
would be a bitter irony if in 
this way the domestic political 
consequences of US fiscal policy 
were to thwart the Administra- 
tion's sincere promotion of 
liberal economic policies 

It is second time round tor 
Antony Beevor, aged 47, 
solicitor and merchant banker, 
who will begin a stint as direc- 
tor general of the City of 
London's Takeover Panel at 
the panel’s regular quarterly 
meeting on December 11— 
— traditional handing-over day 
for the job. _ . ^ 

Beevor was seconded to the 
panel tor two years in the early 
1970s as secretary. 

When he left to join Hambros 
corporate finance department 
(where he has been ever since 
and is now a director) the then 
Governor of the Bank of 
England, Leslie O’Brien 
thanked him for his services 
and added, " I hope to see you 
back as director general in ten 
years time." 

In the event it has taken 
Beevor 15 years to make the 
round trip. But be has a repu- 
tation for being a patient mam 
and says he is looking forward 
to his two years to the director 
general’s chair. 

His father. Miles Beevor, aged 
87, also a solicitor and business- 
man will be remembered by 
old City hands as legal adviser 
to the British Transport Com- 
mission, and ma n a gi ng director 
of the Brash Group. 

After Winchester and New 
College, Oxford, Antony Beevor 
spent 10 years with Aflhhnrst, 
Morris, Crisp, and Co the 
solicitors, before going to the 
Takeover Panel# He is married 
with two 'children. 

Men and Matters 

sidiaries of Mercantile House. 

Walker-Ha worth’s 21-month 
tenure has seen a flood of take- 
over activity, unrivalled in 
volume and relative size tor 
nearly two decades. More signi- 
ficantly perhaps, the innovative 
skills — and wiles — of take- 
over artists have never been 

After the Guinness affair, the 
panel’s exposed position at the 
keystone of the City's regulatory 
structure has become a favour- 
ite target for critics. 

Its authority has survived an 
initial legal challenge and 
should be bolstered by evolving 
links with the Securities and 
Investment Board. 

Nevertheless, Bee Tor’s 

appointment has been greeted 
predictably hy some as a “last 
throw ” — the maiai hostile 
description for each amend- 
ment to the Takeover Code or 
change in personnel at the 

Front line 

While Beevor yesterday dis- 
creetly parried questions about 
his plans as director general, 
the size of the task he will face 
in December was illustrated by 
the brevity of the present in- 
cumbent's supporting appear- 
ance at a Press briefing. 

John Walker-Haworth had to 
steal downstairs from a meeting 
of the full Takeover Panel 
called to consider the late (and 
unusually structured) bid by 
Crownx, the Canadian group, 
for two money-broking sub* 

As an active takeover prac- 
titioner— and not once hauled 
up before the panel— Beevor is 
expected to take a sensible, non- 
dogmatic approach which should 
complement the dominant hand 
of chairman Robert Alexander. 

Beevor himself regrets the 
changed world since he last 
worked at the pen el, when the 
code was a thin document 
indeed, and based on general 
principles rather than precise 
rules. His commitment to the 
panel, however, is undiminiShed; 
“It la thet best system for 
regulating takeovers that any- 
one has devised so far." 

Canadian capers 

Service (CSIS) is under a cloud 
following the resignation of its 
director,. T. D’Arcy Finn. 

Finn bas stood down after it 
was revealed in federal court 
that the agency submitted a 
misleading affidavit to obtain a 
wire tap warrant. 

The development has given 
fuel to critics who have per. 
sistently claimed that the three- 
year-old agency, formed to 
replace the scandal-torn security 
service of the Royal Canadian 
Mounted Police, has failed to 
change its stripes in sufficient 
degree. Certainly, former police 
officers continue to be well 
represented on the agency’s 

In selecting Finn's replace- 
ment, however, the Mulroney 
government appears to have 
signalled its determination to 
make a break with the past 

Reid Morden, who takes over 
as CSIS director, is a career- 
diplomat with no _ previous 
experience in Canadian intelli- 
gence agencies# 

Most recently assistant secre- 
tary to the cabinet for foreign 
and defence policy, Morden had 
a hand in negotiating the treaty 
which defines Canada's trade 
i into: with the European Com- 
munity, and is reputed to be a 
tough administrator. 

Although reportedly 
"stunned” when informed of 
his new posting, Morden 
apparently has no doubt about 
his ability to do the job. 

“I think, frankly, that any- 
one with an exposure to senior 
policy-making in the govern- 
ment ought to be able to do 
this,” he says. 





This impressive newly completed headquarters 
building is situated in a prime location in the centre 
of Staines. Communications are excellent with th^ 
M3, M4, M25 and Heathrow and Gatwitik Airports 
within easy reach. 

O Full air randrtioning O Energy-saving bronze 

double glazing O Magnrlfcent entrance atrium O 
Raised floors throughout O Three passenger lifts 
O 163 on-site parking spaces floor area is 43,4Q0sq ft tfividedas fellows; 

fourth H oor 
Thud Floor 
Second Floor 
First Floor 
Ground floor 


Risk factor 

8,300 sq ft 
8.770 sq ft 
8,750 sqft 
8,250 sq ft 
9.330 sqft 
43.400 sqft 

Britain’s MJ5 is not the only 
government intelligence agency 
to be the topic of some con- 
troversy at the moment 
Its counterpart to Ottawa, the 
Canadian Security Intelligence 

Roux’s return 

Ambroise Roux, the long stand- 
ing eminence grise of French 
industry and finance, is malting 
a dramatic comeback to the 

From the Unit Trust Newsletter 
tor September, “We cannot 
guarantee that, letters to the 
•Your Questions Answered’ page 
will be answered." 

Ah weR! 


• *: Vt 

Financial Times Friday September 18 1987 


to ■», ■ iOs-JfJ J; 

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,'i' K . •> Sf'.-U 
, :0;;.>5 1 

Mjrplc would tuvc enjoyed 
the assembly of -Britain’s 
Liberal Party in Harrogate this 
week. There were no corpses 
and no great arguments to 
speak ot Nothing much hap* 
petted except that the Liberals 
agreed, as expected, to begin 
negotiations with the Social 
Democrats on the formation of 
a new party. It might have been 
called, after a famous book, 
The Strange Death of Liberal 

Beneath the surface, how* 
ever, it was all rather intrigu- 
ing. Some people did not torn 
up: the recently ennobled Roy 
Jenkins, for instance. And if 
there were no murders, there 
was character assassination. 
David Owen, the former Social 
Democratic Party leader, was 
the principal victim. 

Some of the key characters 
did not talk to each other very 
much. The relationship between 
David Steel, the Liberal leader, 
and Robert Maclennan. Dr 
Owen’s successor, is still at 
arm's length. Despite having • 
been Scottish MPs together for 
more than 20 years, they appear 
scarcely to know each other. 
Scotland, says Mr Steel, is a big 

There was also an air of 
mystery, even if nobody could 
be sure what the mystery was. 
The motivation of the charac- 
ters was mysterious as welL 
What is Ur Maclennan np to 
and what is Ur Steel going to 
do next? 

Ur Steel, is not telling, per- 
haps far the entirely plausible 
reason that he has not yet de- 
cided. After more than 10 years 
as party leader, he says that he 
would be more than happy to 
make way for a successor. He 
would hope to continue as an 
UP, but would devote more 
time to his interests in Scottish 
and African affairs. 

The trouble is that an obvious 
choice for the succession, David 
Penhalligon, the UP for Truro, 
was killed in a car crash last 
December. Mr Steel would have 
had no objection to the leader- - 
ship of the new party going 
straight to Dr Owen but, as he 
says. Dr Owen has deliberately 
thrown it away. 

The successor will almost 
certainly have to be an UP and 
there are very few eligible can* 
didates. Alan Beith, the deputy 
to Ur Steel and the UP for 
Berwick upon Tweed, has been 
consistently impressive in his 
speeches to liberal assemblies 
over the years, but he is not 
much known in the country and 
Mr Steel has not done a great 
deal to bring him on. 

Paddy Ashdown, MP for 
Yeovil, Is full of ambition and 
energy, but perhaps still, a bit 1 
wild. Charles Kennedy, the 
young SDP UP for Ross and 
Cromarty who quickly embraced 
the call for the merger with the 
Liberals and dropped Dr Owen, i 
is a possible long-term candi- • i 
date, but not yet. ■ i 

Catehing up ^ 
with the West 

From Vie Editor, 

La Dtcauverte. . 

Sir, — In his Lombard column 
(September 4) Leslie CoIIit 
asks why Hungary, which intro- 
duced market reforms, has done 
so bad y while East Germany, 
which stuck to “orthodox” 
central planning, has done so 
well This is confirmed by 
figures from national accounts: 
real annaal growth was OB per 
cent in Hungary during 1879- 
1886, while it was 4.4 per cent 
in East Germany during the 
same period. 

Mr Collit gives two reasons 
which seem to me quite insuf- 
ficient The first is the “German 
spirit ” argument If this was a 
significant explanatory variable, 
one would expect' much lower 
growth rates in non-German 
centrally planned economies. 
This is not the case and the 
annual growth rate (for 1979- 
88) has been much faster than 
in Hungary in all countries that 
stuck to orthodox planning (A3 
per cent in Bulgaria, 2.1 per 
cent in Czechoslovakia, 4.6 per 
cent in Romania, 3.7 per cent in 
the TJSSR and 8 per cent in 

The second argument is that 
market reforms have not gone 
far enough in Hungary. What 
is implied, I . believe, is that 
economic freedom not having 
been implemented enough can- 
not manifest its intrinsic 
superiority. If this were a sig- 
nificant variable one would ex- 
pect fast growth in small Euro- 
pean market economies of a 
similar level of development, 
Mke Greece or Yugoslavia or a 
bit farther away, like Ireland 
and Portugal But the growth 
rate in these countries bos bera 
very slow, and dose to that of 
Hungary (1 per cent in Greece, 
IB per cent in Yugoslavia, L9 
per cent in Ireland and 2.7. per 
cent In Portugal). The under- 
lying idea in this second argu- 
ment Is that economic freedom 
will spur individual initiative to 
Its maximum, and that the mar- 
ket will guide it in the best pos- 
sible direction. I thought every- 
one knew that this was only 
true under very special assump- 

A more serious explanation 
of the paradox that intrigues 
Leslie Collit is that the “risk 
taking market economy” does 
not necessarily, and under all 
circumstances,- produce better 
results than central planning. 
The Americans and the British 
found this out during the first 
and second Worid Wars when 
the task was to produce maxi- 
mum amounts of known com- 
modities. Central planning 
■ proved vastly superior. 

I propose a double explana- 
tion for the indisputable better 
performance of centrally plan- 
ned economies during the 
second phase of the- world crisis 
(1979-88) The first is that 
these countries are catching up 
with the West and that there 

Politics Today: the 
Liberals at Harrogate 

The Steel 


By Malcolm Rutherford 

AH this points to Mr Steel 
as the natural leader of the 
new party. It .would be the 
next logical step towards 
bringing about the realignment 
of British politics which he has 
long talked of. 

Yet, apart from his own re- 
servations, there axe arguments 
against this. Ur Steel is begin- 
ning to look a bit tarnished. 
He has been around long 
enough for there to be blotches 
on his record. 

It ds doubtful whether he 
achieved as much as he would 
have liked from the Lib-Lab 
pact in the late 1970s. He 
Behaved quite ruthlessly to Ur 
Jenkins in the 1983 general 
election campaign. He appears 
to have been similarly ruthless 
ki blaming Dr Owen for the 
Alliance not doing better in the 
election this year and m call- 
ing for a merger almost before 
the results were counted. 

There is also a stronger case 
against Mm. Ur Steel has never 
really been interested in ideas. 
His heart and his head may be 
generally in the right place, but 
ideas bore him. For hfan, re- 
alignment is an end in itself. 
He does not appear to appre- 
ciate that a political party only 
takes off when it has a solid 
body of thought behind it and 
represents an identifiable con- 
stituency in tiie country. 

He may seem, too, just a 
shade opportunistic. Why else 
did he take a lead so quickly 
after the general election? And 

Letters to the Editor 

is a strong similarity between 
catching up and producing 
maximum amounts of known 
goods (as in a war economy). 
With & tolerably competent 
bureaucracy and a minimum of 
social discipline, central plan- 
ning should normally (in many 
respects at least) produce bet- 
ter results than the market, in 
catching up. There is nothing 
new in thds idea, and no one 
should understand it as mean- 
ing that catching up is simply 
a linear programming problem 
consisting in choosing technolo- 
gies already tested in the West 
There is no doubt of the role 
that discovery, innovation and 
incentives play in the process 
of catching up. 

The second explanation is 
that the rigidity, the routine, 
and the relatively “ autarkic ” 
character of their economic 
situation, factors which in 
general tend to reduce growth 
in comparison to what it could 
be, have protected orthodox 
centrally planned countries 
from the violent fluctuations 
the world market has experi- 
enced lately. What has been 
protected of course is .their 
capacity for real growth, not 
always their disposable in- 1 

Francisco Vergara, 

1 Place Paul Painleve, 

Paris 75005. 

Smoking and 


From Joy Townsend 

Sir,— 'Having recently returned 
from holiday I write in reply 
to the letter (August 22) by the 
director of public affairs of the 
Tobacco Advisory Council. My 
original letter to you included 
references to my statistical 
sources but these were edited 
out According to the Annual 
Abstract of Statistics the index 
of production of the UK tobacco 
industry was 5 per cent higher 
in 1973 than in 1984 (95.0 com- 
pared to 90.3 with 1980—100). 
According to the Employment' 
Gazette, employment in the 
industry was 50 per cent higher 
in 1978 than in 1984 (33,200 
compared to 22,000). There are 
some year by year differences 
in published government static, 
tics due to updating, but my 
point stands clearly that the 
Change in employment is of a 
far greater order than that of 

That sickness rates of smokers 
are higher than those of non- 
smokers is also -well . docu- 
mented. For example the 
recently published British 
Health and Lifestyle Survey 
reports that male current 
smokers of writing age were 

nearly twice as likely Co have 
high illness ratings when com- 
pared with non-smokers. The 
same survey quotes the m a in 
reason for men 'giving up smok- 
ing as current iU health. 

Joy Townsend, 

Northwick Pork Hospital 
Watford Road, 

Harrow, Middlesex. 

Life goes on 
past forties 

From the Director, 

Erasmus University Centre for 
International Energy Studies 

Sir,— Your correspondent's 
survey of the North Sea’s pros- 
pects (September 7) correctly 
emphasised the importance of 
the appreciation of fields' 
reserves over time and the sig- 
nificant remaining exploration 
i potent! aL The North Sea oil 
< province is, in other words, 
evolving in exactly the same 
way as an other major pro- 
| vinces as we argued it would 
in the two studies we published 
I in the mid-1970s. 

Our work was; however, 
virulently criticised and the 
disbelief in our conclusions 
was reflected in the widely ex- 
pressed views of North Sea oil 
as a limited, short-term pheno- 
! menon with production as well 
as investment and revenues 
declining even more quickly 
than they expanded: leading to 
the “ what shall we do when the 
oil runs out” attitude to oil 
in the national economy. 

Unhappily, in spite of Lacy 
Kellaway’s more realistic pre- 
sentation on the outlook, the 
diagram (which so prominently 
accompanies her article) show- 
ing the production profile to 
2005 appears to be based on 
data which reflect the earlier 
unjustified pessimism; thus 
helping to perpetuate the myth 
of a country soon to be re- 
dependent on imported energy 
atid/or more expensive indi- 
genous alternatives as well as 
of a national exchequer devoid 
of revenues from oil produo 

Given an oil price at present 
levels, and a continuing will- 
ingness of successive govern- 
ments appropriately to modify 
concession and taxation 
regimes so as to encourage oil 
exploitation, then known and 
potential reserves (from both 
fields’ appreciation and con- 
tinuing new discoveries) could 
maintain the UK’s oil produc- 
tion at around 200m tons per 
»nnnm (2m b/d) for the rest 
of the century: providing the 
producing companies can find 
outlets for all this UK oil in a 
long-term situation of gross 
over-supply in the international 


Why the hezzle 
is rising 

By Richard Lambert 

what is he doing now— waiting 
for the new party to give him 
the crown, or just befog inde- 

Mr Steel says that he will 
make up his mind in January 
or February, when the merger 
negotiations should be more or 
less complete. 

Meanwhile, however, it must 
be frustrating for the party not 
to know what his intentions are. 
After all, the leader should be 
capable of taking it through the 
next general election. There can 
be little point in having an in- 
terim leader. But that is Ur 
Steel’s dilemma: does he want 
to commit himself lor the next 
five years? 

Which brings ns to Ur Mac- 
lennan. Could he, having 
emerged almost overnight as 
leader of the SDP, also become 
a contender to head the new 

The Liberals do not yet know 
quite what to make of him- He 
makes the right gestures. He 
was warmly received when he 
mounted the platform to listen 
to their merger debate on 
Tuesday. When be offended 
them it was unintentional. He 
told the assembly that the new 
party must accept British nuc- 
lear weapons “ for the foresee- 
able future.” Some vaguer 
phrase, like “subject to deve- 
lopment in Geneva,” would 
have been preferred by the 
Liberals. In fact, Mr Maclennan 
treats language very literally. 
For him, the foreseeable future 

could be a very short time. 

He has also softened a hit on 
civil nuclear power, after seem- 
ing to suggest in his speech to 
the SDP conference in Ports- 
mouth two weeks ago that the 
new party must be in favour of 
it He now says that he was 
merely citing it as an example 
of the Alliance not having 
agreed a common policy before 
the election. 

Ur Maclennan has something 
else going for him, apart from 
his not befog Dr Owen. .The 
Liberals have grown rather to 
a dmir e the SDP during the 
years of alliance. They think it 
is better organised than their 
own party, better at decision- 
making and altogether more dis- 
ciplined. They would like the 
new party to learn from it. 

That point was made by, of 
all people, Michael Meadow- 
croft, one of the more anarchic 
of their leading figures, and 
it is widely felt. The Liberals 
believe that it would have been 
time to get their own house into 
more order, even without the 
possibility of merger. 

Ur Madennan’s problem, of 
course, is not so much Dr Owen 
as the 43 per cent of SDP mem- 
bers who voted against the mer- 
ger. He thwiicc that it would 
be no achievement at alL in- 
deed it would be a total disas- 
ter, If tiie merger terms were 
negotiated and then rejected by 
anything like half the SDP. 

Given Dr Owen’s position, 
acceptance of a merger by the 

oil market with oil prices as 
high as $1820. per- barrel. 
Here, on the 'demand side, lies . 
the greatest uncertainty for the 
prospects for the British oil 
sector — and the associated 

macro-economic implications. 
Peter R. OdelL 
Port bus 1738, 

3000 DR Rotterdam. 

How graduates 

From the Secretary, 

University of Cambridge 
Careers Service Syndicate. 

Sir, — Michael Dixon men- 1 
tioned various deficiencies in , 
his league table of universities 
by output of graduates (Sep- 
tember 9) but the categories of ! 
first destination which he uses ; 
incorporate another deficiency. 

He combines the figures for ! 
those not employed at the end 
of December, for those in 
short-term employment and for 
those not available for employ- 
ment To use the sum of those 
figures as the indicator of un- 
employment is unrealistic, and 
ignores important changes In 
the pattern of movement into 

In some fields, traditional 
trainee entry arrangements 
have virtually ceased, largely 
because of externally induced 
financial pressures, and have 
been replaced by the need to 
acquire a track record through 
a series of short-term jobs. 
People seeking careers in such 
fields (museum work, for in- 
stance) will therefore appear 
in the category “ short-term 
employment” as Inevitably as 
potential chartered accountants 
will appear in “ permanent 
employment” and potential 
solicitors in “further full-time 
study or training.” Of course, 
the size of that category has 
increased, but the increase 
reflects the stance of employers 
rather than the employability of 

Michael Dixon himself raises 
a question over the fact that 
the numbers “not available for 
employment ” have been rising. 
It is, of course, difficult to be 
sure why people do not do 
tilings — in this case, why they 
do not make themselves avail- 
able for employment — but it 
is apparent that increasing 
numbers of graduates are 
choosing to delay their search 
for employment, often in order 
to do something maturing and 
educationally useful, like 
foreign travel, beforehand. 

Michael Dixon is more 
experienced and better in- 
formed than most in interpret- 
ing the first destination statis- 
tics, and would, I feel sure, 
agree that they have one major 
imperfection. They are a snap- 
shot, used to record a situation 
which is changing more rapidly 
than at any time in the past 25 

Bill Kirkman, 

Stuart House. 

Mill Lane, 


SDP is never going to be total. 
Thus there must be a point at 
which the rejection rate would 
be low enough for Ur Maclen- 
nan to press ahead regardless. 

He is reluctant to talk about 
this, but it might be around 
20 per cent — the level at which 
David Sainsbury would ttitnk 
twice about financing a separate 
party. Ur Maclennan has virtu- 
ally written off, which he had 
not quite done in Portsmouth, 
the chances of Dr Owen ever 
coming round to the merger. 

The negotiations should now 
begin in earnest and there is 
one key area of agreement 
between Ur Steel and Mr 
Mac;pnntn [ even if they have 
not fully communicated it to 
each other. It is that the new 
party must set out to replace 
the Labour Party as the main 
opposition to the Conserva- 
tives. Only then can it ever 
hope to become the first force. 

There has been a lot of mis- 
understanding about this and 
Mr u»ri»nnan did not help his 
own case by repeatedly stating 
in Harrogate that the new 
party would be the third force. 
Mr Steel did not kelp either by 
attacking Dr Owen for creating 
the impression that the SDP 
only wanted to ally with Mrs 
Thatcher, while the Liberals 
preferred Labour. 

In fact, Mr Steel thinks that 
Dr Owen was giving the Alli- 
ance a bad name in the north 
of England and in Scotland by 
showing too much admiration 

Aimn Harper 

for the Prime Minister. He 
agrees that the main aim must 
be to overtake the Labour 

Ur Madennan’s dislike of the 
corporatism of the Labour Party 
has all the zeal of someone who 
used to be part of it. He came 
to the conclusion some years 
ago that Labour would never 
win a general election again, 
and is determined to show that 
be was right 

Logically, this view of Labour 
as the main enemy must be cor- 
rect from the new party’s stand- 
point There is not going to be 
electoral reform before the next 
general election. Therefore, 
Labour has to be pushed into 
third place if the new party is 
to emerge as an alternative 

Mr Steel and Mr K mkmian 
should talk to each other. 
Politically they have a lot in 
common. They have met how- 
ever, only twice since the 
majority of the SDP agreed in 
principle to seek the merger, 
and then relatively briefly. 
Personal relations between 
them have not become much 

As MiM Marple, whose creator 
Agatha Christie Spent some 
time in Harrogate, would no 
doubt have observed, these 
things are important Mr Steel 
could make his intentions 
clearer when he addresses the 
assembly this afternoon. 

Bat who knows? The plot 
thickens, or is it thinning? 

THE Japanese bond market 
takes a dive — and an impor- 
tant chemicals company Is 
forced into the arms of its 
bankers, crippled by ill-timed 
speculation in bond futures. 
US financial markets go 
through a volatile phase — and 
two or three major investment 
banks are hit with enormous 
losses on speculative trans- 
actions which in at least one 
case had not been properly 

Is this just the tip of an 
Iceberg, with much more wait- 
ing to be exposed as the tide of 
the worldwide bull market 
ebbs and flows? The answer is 
that this is almost certainly so. 
The level of imprudent 
behaviour — and, what is more, 
of financial crimes — can be 
plotted in line with the busi- 
ness cycle. 'When times are 
good and money is plentiful, 
managers change their views 
about what constitutes an 
acceptable level of risk. They 
also become less inclined to 
check expense giaima and to 
slog through rows of numbers 
in search of discrepancies. And 
although there is plenty of 
money around, there are always 
people who want more. 

Successful speculators are 
envied and imitated, and errors 
of judgement — or outright 
dishonesty — can be hidden 
behind the general increase in 
profits and share prices. 

In a depression, all this is 
reversed. As Professor J. K. 
Galbraith once put it, money is 
watched with a narrow, suspi- 
cious eye. and the man who 
handles it is assumed to be dis- 
honest until he proves bimwAif 
otherwise. Audits are penetrat- 
ing and meticulous, and com- 
mercial morality is enormously 
improved. Thus the period 
after the financial crash of 1974 
was one of the most austere in 
recent memory. After the exces- 
ses earlier in the decade, 
hairshirts were much in 
fashion, and property developer 
became a term of abuse. 

Galbraith developed a neat 
concept to describe this cycle. 
At any given time, there exists 
an inventory of undiscovered 
embezzlement in— or rather not 
in— the nation’s businesses and 
banks. This he described as the 
bezzie, a poo] of money which 
expands and shrink in line 
with business conditions. In the 

case of fraud, there may be a 
long gap between the moment 
when the crime is committed 
and the victim begins to feel 
any pain, a happy period in 
which society as a whole feels 
itself to be considerably better 
off than actually may be the 

The most sensational example 
of the bezzie in operation was 
that of the Union Industrial 
Bank of Flint, The 

assistant cashier started em- 
bezzling money from the bank 
early in 1928 to play the New 
York Stock Market. In the next 
few months, it gradually dawned 
on him that more than a dozen 
of his colleagues were doing the 
same thing, and that there might 
well be safety in numbers. Soon, 
the conspirators took to having 
well attended weekly meetings 
in the board room to discuss 
their investments. Reliable bell 
boys in the local hotels were 
retained to give early warning 
of the arrival of the bank 

In this case, the bezzie did 
not lead to much of a net 
increase to the sum of human 
happiness, since the group 
showed an uncanny ability to 
pick the wrong stocks. They 
went short just before the 
market took off in the early 
summer of 1929. and decided 
there was only one way left to 
balance the bank’s boobs— by 
taking out a major long position. 
This they did, shortly before 
Black Thursday. The “league 
of gentlemen," as they liked to 
call themselves, turned out to 
be model prisoners in their 
adjoining cells in Michig an 
State Penitentiary. 

Without looking for any thing 
on quite this extravagant scale, 
the strong bull market of re- 
cent years has obviously en- 
couraged all sorts of excesses, 
both honest and otherwise. 
Major transactions have been 
made on the assumption that 
profits and security prices will 
continue to rise for the fore- 
seeable future; leveraged buy- 
outs befog the obvious example. 
Balance sheet structures and 
overhead expenses have been 
enormously expanded on a simi- 
lar basis. And, yes, sand-filled 
sorics have yet to fall on happy, 
gullible heads as the result of 
crimes already committed. The 
bezzie is running in big num- 




gBSB f\) As everyone everywhere has said at one time 

My or another: “We re over the moon, Barry.* 

WgwJPjW We now know just how it feels to have your name 

Kr^F// According to this year's US Electronics Survey, the 

am UK is seen as one of the most suitable locations for direct 
if inward investment Those American companies that 
rJ if preferred Britain named Scotland as their number one choice 
£fj (England second, N Ireland third and Wales fourth), 
w No bookends for guessing which Scottish New Tbwn 

/ came out on top in the same survey. 

~ Glenrothes. 

Of course, this isn’t something entirely new to us. Just the same 
f thing happened in 78 when Glenrothes emerged as *Tbp Town* in 
h another international survey. 

v Although we certainly wouldn’t be described as an overnight 

success, we trank our efforts deserve a little applause-for consistency if 
k nothing else! 

f So. this once, we thought we'd blow our own trumpet just a fittfe 

bit If you’d like to get aboard our bandwagon, why not give us a call? 
We’d like your company. 


DEVELOPMENT corporation 

MIAONEHOUS^ &£NRDTH£* WE, SC0HAND1CY7 «ML7HS>HON£ 0592-754343. TELBfc 727125 . 





Corporate Advisory 


Friday September 18 1987 


William Dawkins reports from Luxembourg on taxing the limits of EC members’ sovereignty 

VAT hearing no joke for Britain and Ireland 

WHETHER fanners' boots 
could qualify for the same tax 
relief as food because they were 
involved in making agricultural 

produce was among the more 
arcane points raised during a 
preliminary hearing earlier this 
week at the European Court of 
Justice in Luxembourg. 

The issue behind this is no 
joke for Britain and Ireland. 
They were in court to defend 
their right to give VAT exemp- 
tion to a far wider range of 
products than the European 
Commission would like. 

In Britain's case, this in- 
cludes the country’s 30,000 con- 
struction companies, which 
could see their tax bills driven 
up by £ld2bn if forced to pay 15 
per cent VAT on new work. 

The consequences, the UK 
Building Employers Confedera- 
tion (BEO fears, could be to 
squeeze demand for private 
housing and impose a new con- 
straint on public construction, 
already straggling under gov- 
ernment spending limits. The 
extra costs would, of course, be 
passed on to the public, with a 
knock-on effect on inflation. 

The case is an unusually po- 
litical one for the court - and is 
seen by some officials as an un- 
welcome encroachment on its 
judicial independence. 

On the surface of it, the Com- 
mission’s legal action against 
Britain and Ireland is straight- 

forward. According to EC rules, 
VAT zero rating should be al- 
lowed only for clearly defined 
social reasons or to benefit the 
final consumer, both of which 
touch sensitive questions of na- 
tional sovereignty. 

The Commission argues that 
neither of those conditions ap- 
ply to an assortment of zero-rat- 
ed products in Britain, from 
new construction (though coun- 
cil houses can continue to be 
exempt), through to protective 
boots, animal feed, as well as 
energy, water and sewerage 
supplied to industry. 

Ireland, meanwhile, is de- 
fending its right to give favoura- 
ble treatment to a smaller list 
including electricity for busi- 
nesses, fertiliser and seeds. 

The UK argues that the Com- 
mission has no right to chal- 
lenge its decisions on which 
sectors should come in for VAT 
exemption at a time when an al- 
ready controversial draft EC di- 
rective proposes to abolish the 
whole system of zero-rating. 

Put forward by Lord Cock- 
field, the - ironically British - 
commissioner responsible for 
the internal market, the pack- 
age aims to remove what the 
Commission fears is a key dis- 
tortion to free trade by narrow- 
ing the differences in VAT rates 
charged by member states. 

The case is made all the more 
controversial by the fact that 

Lord Cockfleld: controversial 

the Cockfleld package leaves 
construction out of the socially- 
sensitive sectors to be covered 
by the lower rate which it envis- 
ages in its two-tier VAT system 
for the future. 

Britain, an otherwise eager 
supporter of the drive for a free 
co mmuni ty market by 1902, can- 
not accept Lord Cockfleld’s pro- 
posal, which it sees as a chal- 
lenge to the Treasury's most 
basic right - to decide its own 

Clearly, the outcome of the 
Luxembourg case will crucially 
affect the negotiating power of 
both the UK and the Commis- 
sion when the VAT draft comes 
for debate in the Council of 
Ministers in the next few 
months, and it is this which 
threatens to plunge the court in- 
to a political fight Its advocate 
general, Mr Marco Darmon, is 
expected to give an opinion by 
mid-November. IT past cases are 
anythingto go by, that will be in 
line with the final judgment, ex- 
pected next spring. 

The Commission, meanwhile, 
cannot accept that Britain 
should get away with charging 
VAT on just 44 per cent of pri- 
vate spending and Ireland 35 
per cent, when most member 
states tax 90 per cent of con- 

Neither can it accept that the 
private construction industry, 
as opposed to local authority 
housing, exists for clear social 
reasons. This rigid distinction 
is just not appropriate. Our pol- 
icy is for homes, whether they 
are for rich or poor, argued Mr 
David Vaughan, Britain's coun- 

The Commission freely ac- 
cepts that member-states’ social 
policies should, to a point, be 
their own business. The real 
bone of contention is how Car 
the UK and Ireland go in allow- 
ing VAT relief for products that 

benefit the final consumer. 

It does not dispute, for in- 
stance, that food could be VAT- 
free, but does draw the line at 
products involved indirectly in 
making food, which is where foe 
farmers' boots and an i m al feed 
come in. 

Boots used in the production 
of food? Certainly not in Ire- 
land. said Mr Eoin Fitzsimons, 
Dublin’s counsel. 

On a more serious level, fuel 
and power for industry should 
pay VAT because the final con- 
sumer does not benefit directly, 
argues the Commission, which 
does not dispute that private 
energy supplies should contin- 
ue to be exempt 

Britain maintains that foe 
whole question of where zero- 
rating should be allowed is of 
only academic interest to the 
Commission. The practice has 
no impact on foe resources foe 
EC gets as a share of member- 
states’ VAT income - the main 
source of community fending - 
because governments automati- 
cally compensate Brussels for 
VAT revenue lost through zero- 

It is not as if zero rating gives 
foe products at question in 
case an unfair advantage over 
EC competitors, adds foe UK. 
'You just don't trade buildings 
across borders,* says Mr John 
Ray, secretary of the BECs tax 

US textile industry ‘optimistic’ on quotas 


THE US textile industry yester- 
day attempted a note of opti- 
mism about its chances of get- 
ting the import quotas it wants, 
after the US Rouse of Repre- 
sentatives passed legislation on 
Wednesday by a vote of only 263 
to 156. 

An industry spokesman talk- 
ed of "building* on the number 
of yes votes to get the 290 votes 
necessary to override a certain 
presidential veto. But, in truth, 
an override is unlikely. 

From the start, foe legislation 
to place tight limits on imports 
of textiles, clothing and shoes, 
was in trouble. It failed to get 
the support of bey members, in- 
cluding Mr Dan Rostenkowski, 
chairman of foe important 
House Ways and Means Com- 

mittee. and Mr Sam Gibbons, 
chairman of foe trade sub-com- 

"Sector specific* protectionist 
trade measures have proved to 
be a lightning rod for conserva- 
tive opposition, so foe two men 
sought to concentrate their en- 
ergies on foe omnibus trade 
bill, now in a House Senate con- 
ference. The latter, though mas- 
sive and potentially destabilis- 
ing, stresses "reciprocity* and 
prodding on foreign markets 
rather than close American 

The textile bill also attracted 
wide opposition from farm, re- 
tail, export and consumer inter- 
ests. Mr George Gekas, a Penn- 
sylvanian Republican, 

expressed foe dilemma many 

Congressmen were feeing in 
Wednesday’s debate 
"Can we exert the wisdom of 
Solomon to choose which of our 
fellow Americans would be 
most helped or hurt by this leg- 
islation?” he asked. In foe end 
he voted, reluctantly, for the 
measure because "in the shoe 
industry the numbers (of mar- 
ket losses) are so horrible that 
even L a staunch free trader, 
must have pause.” 

The vote cut across parly 
lines, attracting most support in 
states where the industries 
have suffered great losses. Of 
foe Democrats, 193 voted for foe 
measure while 54 opposed iL 
Seventy Republicans voted in 
Savour and 102 voted against 
Mr Donald Pease, an Ohio 

Democrat spoke fervently of 
foe Reagan Administration's 
'maladministration of trade pol- 
icy early in foe decade,” and 
warned: *We have no assurance 
it won’t be repeated.” 

However, be voted against the 
measure because it would, he 
said, violate international trade 
rules and send the wrong mes- 
sage just as the Uruguay Gait 

The debate demonstrated no 
lessening of the shrill rhetoric 
heard against President Reagan 
and foe Japanese. Mr James 
Traficant Junior, an Ohio Dem 
ocrat, fumed that "this presi- 
dent Is not finished yet and 
won't be until he has a full- 
grown rice paddy on foe east 
lawn of foe White House.” 

Reagan speaks of America’s solemn duty 


day celebrated the 200th anni- 
versary of foe US constitution 
declaring that it was America’s 
solemn duty to spread its prin- 
ciples of freedom and limited 
government to foe rest of man- 

Standing in front of Indepen- 
dence Wall in Philadelphia, 
where foe founding Fathers 
gathered 200 years ago to de- 
bate and sign foe constitutional, 
Mr Reagan spoke with mission- 
ary zeal about his country’s call- 
ing in the world 

“The guiding hand of Provind- 
ence did not create this new na- 
tion of America for ourselves 
alone, but for a higher cause - 

foe preservation and extension 
of foe sacred fire of human lib- 
erty. That is America's solemn 
duty," the 76-year-old President 

High above, seven white bal- 
loons marked "Stop Contra Aid* 
hovered in the rain, a reminder 
that some Americans were 
ready on this anniversary day to 
exercise their First Amend- 
ment rights to oppose foe US 
backed rebels in Nicaragua. 

Yesterday brought to a climax 
months of national celebrations 
of foe constitution which have 
also been mixed with debate 
among scholars about whether 
foe original four page document 
meet foe needs of the modern 
US state. 

Some 32 states have called for 
a Constitutional Amendment to 
require a balanced federal bud- 

g et. President Reagan himself 
as called for an economic Bill 
of Rights but two more states' 
signatures are needed to recon- 
vene a convention and, over the 
years, foe Constitution has 
proved remarkably enduring. 

By historical coincidence, 
1987 has seen foe Constitution 
in dramatic action; foe summer 
congressional inquiry into foe 
Iran Contra affair and this 
week’s Senate scrutiny of Presi- 
dent Reagan’s conservative 
nominee for foe US Supreme 

In his speech yesterday, Mr 

Reagan gave a plug to the hard 
pressed judge and later,' at' a 
Republican fend raising event, 
singled out Senator Arlen Spec- 
tor of Pennsylvania for special 
praise. Senator Spector is a 
swing vote on foe divided Sen- 
ate judiciary committee consid- 
ering foe Bork nomination. 

Politics aside, yesterday’s pa- 
gent contained a healthy dose of 
American showbiz and a guide 
to American pride: three 15 foot 
motorised robots, Dennis Con- 
nor’s America's Cup winning 
yacht, a 16-member syncronised 
Briefcase Drill Team composed 
of dancing California bankers 
and lawyers and a chunky 
looking Joe Frazier, the former 
heavyweight boxing champion. 

UK moves to speed up 
merger inquiries 


THE UK Government has called 
in outside consultants to reco- 
mend ways of speeding up offi- 
cial investigations into take- 
overs and mergers. 

The review, being carried oat 
by management consultants 
from Ernst & Whinney, foe ac- 
countancy firm, follows growing 
City of London concern that Mo- 
nopolies and Mergers Commit 
sion investigations take too 

The review will cover foe 
-operations of the Office of Fair 
Trading the Department of 
Trade and Industry’s competi- 
tion policy branch and the com- 
mission. The consultants have 
been appointed to look at 
•merger control procedures', 
the Department said. 

The proposed takeover by 
British Airways of British Cale- 
donian in July brought foe 
question of tuning to a head. 
The two airlines said that foe 
deal would be called off if a mo- 
nopolies investigation took foe 
usual six months. Lord Young, 
Trade and Industry Secretary, 

subsequently directed foe com- 
mission to report within three 

Last week the Government al- 
so limited to three m onths a 
commission inve stigation into 
the sale of WH Smith’s book 
club interests. 

Insiders believe that investi- 
gations could be completed in 
even less time than this. 

The speed with which foe Of- 
fice of Fair Trading makes a re- 
commendation to ministers for 
a referral will also come under 
review. In foe British Airways 
case, it reached its recommen- 
dation in less than two weeks - 
-seen at the time as very quick, 
and an indication that it has 
fewer problems to overcome 
than the commission. 

The consultants, called in at 
short notice at foe beginning of 
this month, have been given un- 
til foe end of October to com- 
plete their review. 

The review is part of a wide- 
ranging government review of 
competition policy. 

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POiWaW imwi 

British unemployment 
falls to four year low 


THE BRITISH Government’s 
optimism over foe outlook for 
foe UK economy was given a 
further boost yesterday by a fell 
of more than 43J0QQ is foe offi- 
cial unemployment total, a con- 
tinuing productivity surge and a 
upturn in investment spending. 

The decline in the jobless to- 
tal was foe . l&h consecutive 
monthly fell and it leaves the of- 
ficial figure of ZJB33m at its low- 
est level for over four years. 
Alongside foe jobs’ statistics; 
the Department of Employm ent 
reported a 7.2 percent increase 
in productivity growth ever foe 
past year. 

The Department of Trade and 
Industry, meanwhile, said that 
foe volume of investment 
spending by manufacturing in- 
dustry rose by a nearly 14 per 
cent in foe second quarter of 
this year. It also revised up- 
wards its estimates of Britain’s 
.overseas earnings for the first 
half of foe year, changing what 
was thought to be a small deficit 
on foe current account into a 

Mr Nigel Lawson, foe Chan- 
cellor of the Exchequer, howev- 
er, rejected any idea that foe 
economy was overheating. 

Britain was likely to record- 
above trend growth this month, 
but that was unlikely to carry 

through into 198& Last month’s 
one point rise in interest rates 
wasenough to head off any risk 
of higher inflation. 

Yesterday’s batch of favoura- 
ble economic statistics were the 
second this week, following 
news on Wednesday of a sharp 
rise in manufacturing output 
and a brightening outlook for 
sizeable tax cuts in next year’s 

It was marred, however, by 
signs that foe growth of average 
warnin gs in Britain’s manufac- 
turing industry is beginning to 
edge up in response to foe' 
strength of output Despite foe 
strong gains In productivity, the 

earnings figures are translating 
Into some acceleration in unit 

Overall, yesterday’s figures 
were well-received in the City 
of London but the reponse from 
financial markets was mated by 
concern that the present pace of 
economic growth cannot be sus- 
tained without pushing up infla- 
tion. In particular, the markets 
are uncertain ahead of today’s 
figures for foe money supply, af- 
ter evidence last month of a rap- 
id acceleration in credit de- 

Mr Lawson would not be 
drawn on foe prospects for tax 
cuts in next year’s Budget but 
acknowledged thafc*Public fi- 
nances are clearly under very 
good control”. 

For foe opposition Labour 
Party, Mr Michael Meacher, foe 
shadow employment minister, 
said that the fall in the unem- 
ployment figure was welcome, 
but it was brought about largely 
as a result of foe Government’s 
pre-election spending spree. “It 
is only tragic that all this £4bn 
<$&4bnJ was fed into a huge con- 
sumer credit spree which will 
peter out next year when unem- 
ployment will start to rise 

The sharp fall in foe jobless 
total over foe past year in part 
reflects foe expansion of the 
government’s special measures 
- the numbers on foe Youth 
Training Scheme, in particular, 
have risen steeply. 

There is also increasing evi- 
dence, however, that the 
strength of the economy is tran- 
slating into rising employment, 
with a slowdown in the numbers 
of jobs being lost in manufac- 
turing coinciding with contin- 
uing growth in employment in 
service industries. 

Yesterday's statistics for 
earnings show that foe average 
annual increase in the manu- 
facturing sector has edged up to 

814 per cent. 

buys US 

By Lisa Wood ki London 

GUINNESS, the international 
drinks group, has bought for 
$480m Scbenley Industries, a 
major distributor of its brands 
in the US and owned by Riklis 
Family Corporation. 

The acquisition, announced 
yesterday, overshadowed Guin- 
ness’s interim financial results 
for the year to June 30 1987, 
which, in yielding a pre-tax 
profit of £151m 15248m), was less 
than City of London forecasts. 

Scbenley Industries, owned 
by Mr Meshnlam Riklis, is foe 
sixth largest wine and spirits 
business in the US. It is expec- 
ted to have sales of more than 
$500m and profits before inter- 
est and taxes of about 565m in 
the year ended Jannazy 31 1988. 

The company, which has a 
number of its own brands, dis- 
tributes major Guinness brands 
in the US including Dewar’s 
White Label whisky and Gor- 
don’s Gin. 

The acquisition is in line with 
Guinness’s strategy of gaining 

more control of its distribution 
outlets as it and other major 
drinks companies battle for 
global markets. 

In addition, the acquisition 
resolves a legal wrangle be- 
tween Mr Riklis and Guinness 
over the ownership of the De- 
war’s whisky trademark in the 
US. Dewar’s, formerly owned by 
Distillers, acquired by Guin- 
ness in April 1986, is foe leading 
Scotch whisky brand in foe US. 

The 5450m purchase price 
will be paid in cash from exist- 
ing funds. However, a further 
consideration valued at about 
5110m is payable in cash during 
foe next five years depending 
on sales volume. In addition, 
Guinness will assume approxi- 
mately 575m of debt relating to 
foe wines and spirits business. 

The acquisition was well re- 
ceived in foe City of London al- 
though there was disappoint- 
ment over foe interim financial 
results. Guinness acquired Dis- 
tillers in April last year and if 
Distillers had been included for 
foe whole of the first six months 
of last year, foe interim result 
this year of £I51m would com- 
pare with £142m last year. 

A set interim dividend of 3p 
is to be paid with a forecast fay 
Guinness’s board of a final divi- 
dend of R2p, giving a total net 
dividend of 9.2 p for the year. 

Face lift for 
Marshall Field 

Continued from Page 1 

a long succession of rebuilding 
and redecoration schemes since 
Mr Marshall Field, a former 
■store clerk from Massachusetts, 
started his first Chicago shop in 

He lost one store in foe Great 
Chicago Fire of 1871, then re- 
built it, only to lose it again in 
another blaze six years later. 
However, his roost grandiose 
creation was in 1902, when four 
years before his death he built 
massive pillars to Rank the 
State Street entrance. They 
were the tallest stone monoliths 
west of the ruins of K a m a h on 
foe Nile. ' 

In 1986, the State Street store-, 
which itself dates back to 1879- 
accoanted for 20 per cent of the 
Marshall Field retail chain’s 
sales of$lbn- 

However, BAT’S theory is that 
many suburban consumers also 
use foe State Street store for 
window-shopping, then buy 
goods from the other 14 Mar- 
shall Field stores in the city’s 
metropolitan area. 

BAT has been encouraging 
swift growth by foe Marshall 
Field chain, whose sales have 


at Guinness 

The market may still be a touch 
undecided over foe merits of 
Guinness shares, but foe com- 
pany’s operations are s tarting , 
to emerge in a clearer and more 
light. The Schenley 
deal, obviously right in strate- 
gic terms, seems to be coming 
comparatively cheap. The inter- 
im figures, which yesterday had 
the analysts cheerfully acknow- 
ledging the guesswork of their 
previous forecasts, now form a 
basis for more reasoned growth 
projections over foe next few 

The figures also confirm foe 
extent to which Guinness is now 
a uew version of foe old Distill- 
ers. Brewing profits - down 
mainly because of an extra £9m 
spent on advertising - have 
shrunk to less than a sixth of foe 
pre-interest total. However, 
costs in distilling are now some 
£20m lower on an annualised 
basis, with twice as much prom- 
ised again as production and 
domestic marketing are knock- 
ed into shape On a longer view, 
the picture for spirits world- 
wide is scarcely one of growth. 
The formula for s urvi val is by 
now familiar - genuinely inter- 
national brands, controlled all 
the way from production to 
-point of sale. It is also foe for- 
mula pioneered by Mr Anthony 
Tennant’s old employer, IDV, 
and Guinness took some pride 
yeste rday in pointing out that 
the 55>5i& (including assumed 
debt) paid for Schenley is 
cheaper at &3 times pre-inter- 
est profits than foe 8.7 times 
paid by IDV for Heublein. 

Revised forecasts of some- 
thing over £4D0m for the frill 
year pot foe shares, down 8p 
yesterday at 367p, on a prospec- 
tive multiple of just over 12. 
This is roughly in line with foe 
sector, which seems fair given 
that growth should be below 
average this year but above 
average next There is also, of 
course, foe threat of litigation 
from Argyll and the overhang of 
shares held by SchenleyV par- 
ent; bat these are problems of 
the old Guinness, and the 
shares are starting to look to the 


Share Price relative to FT-A 
All - Share index 

1 1 60 L ::\- -t* -’-Tr-: 

140 v*: i 



Sept ’86 

Sept ’87 

Conor's word to prove It Over- 
heating worries have gone; unit 
wage cost increases are low, 
even if earning s rises are un- 
comfortably above inflation, 
and industrial output is keeping 
pace with retail sales increases. 
Even foe trade figures have 
been revised to . show a surplus 
in foe first half of foe year. 

Yesterday’s buoyant mood 
could be reversed at a stroke to- 
day should foe bank lending fig- 
ores turn oat much above £3bn. 
Bat barring that accident, and 
so long as foe UK can keep its 
attention away from Wall 
Street, foe market might be set 
fair - at least until the end of 


Those cynics who thought that 
foe Government was deliberate- 
ly priming the market for foe BP 
issue are looking more and 
more plausible. After equities 
were knocked down by a base 
rate rise in August, they are 
now obligingly running up 
again just as the sale details are 
filtering ouL The economy is in 
fine shape - we have one 
month’s figures and foe Chan- 


RTZ ’s shares have risen from 
under £8 to over £24 during foe 
last twelve months, enabling 
foe company to overtake Its old 
rival Anglo American in terms 
of stock market capitalisation. 
Bat as yesterday’s 21 per cent 
rise in net profits underlined, it 
is the group's sprawling indus- 
trial interests which are power- 
ing growth these days and not 
its traditional business as a 
mining finance, house. The. com- 
bined contribution from CRA. 
Rio Algom and Palabora fell by- 
close to a fifth in foe first six 
mouths, and together chipped 
in less than RTZ*s wholly- 
owned metal fabricating and 
speciality chemicals activities. 
Indeed, two thirds of foe 
group’s profits are now coming 
from industrial products and a 
£23m rise in set profits from 
this source more than offset flat 
energy earnings and marginally 
lower earnings from metals. 

The combination of a surpris- 
ingly strong Australian dollar 
and a temporary loss of market 

share by CRA's Haxomersiey 
Iron property explains the 
sharp drop in group profits 
from down under. But with the 
announcement of another 
round of substantial redundan- 
cies, CRA’s performance should 
start to improve, and .RTZ 
should also begin reaping the 
benefits of foe recent surge in 
metals prices in foe second 
half Aluminium prices, for ex- 
ample, are 28 per cent up on the 
first half average, and this will 
help RTZ earn upwards of 
£275m for the full year, putting 
it on a prospective multiple or 
around 17 times earnings. Fora 
cyclical mining stock this sort of 
multiple would look undemand- 
ing, bat if it is treated as an in- 
dustrial company, it looks more 
than enough given its relatively 
unexciting profits outlook aver 
the next couple of years. 

Recldft & Colman 

When Reckitt & Colman 
bought Airwiek in late 1984, the 
City was slow to realise how sig- 
nificantly the merger would in- 
crease profit margins in 1986 
and beyondL Similarly foe pur- 
chase of Durkee in the US last 
autumn has had foe effect of de- 
pressing group profit growth in 
the first half of 1987. Durkee 
made a pre-tax loss in that peri- 
od but before related Interest 
charges of around $5m or so it 
made a profit and after the sea- 
sonally stronger second half it 
should comfortably cover its 
financin g costs for foe year. It is 
only in the second half that the 
sales force will be merged with 
French’s and foe two office 
blocks be replaced by one. And 
when US margins do rise again 
they will be on the higher com- 
bined sales. 

Durkee is not solely responsi- 
ble for yesterday’s share price 
fall of 27p to 1085p. The rearran- 
gement of foe Australian busi- 
ness did not help understand- 
ing of the results. And analysts 
had hoped that Reckitt would 
say more than it did about poly- 
acrylate polymer, the drug 
which combined with cimeti- 
dine might lower the required 
dosage for treating ulcers. With 
pharmaceutical profits under 
20 per cent of foe total it takes a 
lot of excitement in that area to 
shift the shares. Failing that en- 
couragement, earnings growth 
is likely to be roughly in line 
with foe market average this 
year, and a prospective multi- 
ple of 16.5 is hardly enticing. 
Eventually, though, better mar- 
gins at Durkee and more acqui- 
sitions should help the shares 
to regain their sheen. 



has sold its 

forest products subsidiary 

Balfour Guthrie (Canada) l im ite d 

The undersigned acted os 
financial advisers to DalgetyPLC 
in this transaction 

Lazard Brothers & Co., limited 


Pemberton Houston 


September 1987 


flC/X f\J fMlfMG 






Friday September 18 1987 






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. i: 



nois to acquire 
for $744m 

Crownx’s AnatoJe Kaletsky in New York looks behind the scenes at Coca-Cola’s foray into Hollywood 

Mercantile Puttnam exit stirs Coke’s critics 


OWENS-ILLINOIS, the largest US 
glass container manufacturer 
which went private in February in a 
leveraged buyout, is negotiating to 
acquire Brockway, the second larg- 
est glass container supplier in the 
US; in a deal worth around 5744m. 

■\ The Company said that provided 
Srockway’s board agrees to the pro- 
posed 7 merger to- a special nieeting 
, scheduled for late yesterday it 
would launch a dub tender offer, of 
■$80 a share for Brockways l 2:4m 
common shares outstanding. 

Brockway, which operates 11 
glass container plants in the US as 
weD as a plastic and metals contain- 
er business and a commuter air ser- 

vice, had sales last year of SUffibn. 
An official for Owens-Illinois said 
the company considered that a com- 
bination of the two companies, 
which would benefit from Owens’ 
proprietary technology, could devel- 
op a very competitive glass contain- 
er business. 

This would boost the ability of 
glass to compete' against other ma- 
terials, particularly in the beer and 
soft drinks market, where glass has 
iaoedatough job to remain compet- 
itive in recent years, -he added. Both 
companies also have plastics and 
metals packaging businesses. 

Owens-Illinois believes this is the 
first instance of a company, recent- 
ly gone private, making a bid for a 

major public company. Owens-Illi- 
nois went private after it accepted, 
an offer earlier this year from Kohl- 
berg. Kravis & Roberts, the invest-, 
ment firm which specialises in tak- 
ing companies private. 

Brockway’s share prices was up 
$19% to trade just below the offer 
price at 558% yesterday morning. 

As part of the merger agreement, 
Brockway will grant Owens-Illinois 
an option to buy Z3m shares, or 
1&5 per cent of the outstanding 
shares, st $60 a share. 

Brockway also agreed that if the 
merger is approved and the compa- 
ny is acquired by a third party, it 
would pay Owens a fee of 537.5m. 

Heileman rejects Alan Bond bid 


fourth-largest US brewer, yester- 
day rejected the S1.2bn unsolicited 
takeover bid from Australia's Mr 
Alan Bond, but left the door open 
for talks with the Australian brew- 
ing and resources magnate. ' 

The move by Milwaukee-based 
Heileman’s came- as Wisconsin 
legislators finalised passage for a 
pair of anti-takeover proposals 
prompted by Mr Bond’s bid. The 
State Governor, Mr Tommy Thomp- 

son, was expected to sign the mea- 
sures yesterday. 

Heileman said its board unani- 
mously determined that the S38-a- 
shaxe tender offer launched on Sep- 
tember. 4 by Amber Acquisition, a 
unit of Bond Corporation Holdings, 
Australia's second-largest brewer, 
was “inadequate and is not in the 
best interests of the company or its 

In language that is becoming a 

hallmark of takeover defences, 
Heileman said it instructed 
Merrill Lynch Capital Markets, its 
financial adviser, to explore altern- 
atives to enable shareholders to 
realise the full value inherent in the 

The board also determined not to 
redeem Heilenian's outstanding 
“poison piT preferred stock pru- 
chase rights in response to the of- 

FAI buys 19.9% share in Renouf 


FAI, Mr Larry Adler's Australian 
insurance and financial services or- 
ganisation, has taken a 19.9 per 
cent Renouf, the New 2e&- 
land banking; industrial and prop- 
erty group previously controlled by 
Mr Bruce Judge. 

Mr Judge has resigned as chair- 
man, but will stay on the board. 

The move follows a period of un- 
certainty generated by the decision 
of Ariadne, Mr Judge's Australian 

flagship gronp, to reduce its holding 
in the company from 50 per cent to 
14 per cent, and to transfer the bal- 
ance to Judge Corporation, Mr 
Judge's New Zealand investment 
vehicle, and an overseas associate. 

FAI has now bought 52m shares, 
with Sir Francis Renouf the compa- 
ny's founder, taking a further 15m 
to increase Ids holding to 57m. 

. DFC Ventures, the equity invest- 
ment arm of DfC New Zealand, the 

government-owned financial group, 
will buy 8m. Sir Francis has been 
elected chai rman 
Analysts say that the resolution 
of Ariadne’s position and the arrival 
of FAI are positive developments 
for w^nyurf, which is considered to 
be undervalued at its current price 
of NZ$3.12 a share. Renouf re- 
corded profits of NZS150m 
(USS 96m) for the year ended June 



By David Lascelles In London 

CROWNS, the Canadian finan- 
cial services and health care 
company, was thwarted yester- 
day in its last minute attempt to 
intervene in British & Common- 
wealth's takeover of Mercantile 

The Takeover Panel, the vo- 
luntary body which regulates the 
City of London's takeover activi- 

from going ahead with a 
controversial counter-offer for 
the wholesale broking unite of 
Mercantile House which B&C in- 
tends to spin off. 

As a result, Crownx’s bid 
lapsed, and Crownx tendered its 
14L9 per p?nt holding in Mercan- 
tile House to B&C which now in- 
tends to complete the takeover as 
soon as possible. B&C said it was 
delighted with the ruling. Mr 
Gary Klesch, the owner of Qua- 
drat, the securities firm which 
had already an agreement 
to buy the wholesale broking 
businesses, was not immediately 
available tor comment But be 
had previously denounced the 
Crownx offer as “a bribe”. 

The Panel, which met in ur- 
gent full session yesterday morn- 
ing, issued a detailed five page 
stateme n t last night which con- 
cluded that the d**»l between 
B&C and Quadrex should go 
ahead. It also absolved Mercan- 
tile House from holding a special 
shareholders’ meeting to ap- 
prove the deal This meeting, 
which was required by the Take- 
over Code, was scheduled for 
next Monday 

Crownx had offered £288m 
($456m) for Mercantile’s whole- 
sale broking nnitv, the as 
Hr Klesch. However in a move 
believed to be unprecedented it 
also offered to pay Mercantile 
shareholders lOp a share if it was 
all o w ed to buy the businesses In- 
stead of Mr Klesch. 

European Home Products PLC 

has acquired the operations of 

Scholl International 


Schering-Plough Corporation 

The undersigned acted as a financial advisor 
to European Home Products PLC in this transaction. 


IT SEEMED a bit implausible from 
the beginning. Applying the princi- 
ples of scientific marketing to tame 
the wildly unpredictable financial 
behaviour of the Hollywood film 
business, seemed at first blush tike 
the epitome of management-school 

Nevertheless, when Coca-Cola 
bought Columbia Pictures in 1982 
Wall Street and Hollywood alike 
were willing to give the merger the 
benefit of the doubt, once they had 
recovered from the initial shock of 
the acquisition's price-tag. 

The profits from Columbia’s tele- 
vision business were soaring and 
the value of its movie library was 
growing at an impressive rate. If 
Columbia’s movie producers were 
failing to turn out the block-buster 
successes on which Hollywood's for- 
tunes are built, Coca-Cola's share 
price was still doing spendidly, in 
part at least because of the high- 
growth image which the glamorous 
pntprta irnnon tg divisions had graft- 
ed onto the staidly profitable soft 
drinks cash machine. 

Some analysts even began to 
speculate that the world’s most suc- 
cessful marketing company had 
really cracked the challenge. Per- 
haps it had found a way of "setting 
movies tike soda-pop" and thereby 
turning film**! entertainment into a 
growing but reliable money earner 
instead of the financial rollercoas- 
ter that Coca-Cola's generally cau- 

tious shareholders had initially 

Yesterday the wheel camp foil 
circle back to scepticism with the 
announced departure of Mr David 
Puttnam, the distinguished British 
film producer whom Coca-Cola 
brought in to run Columbia’s flag- 
ging movie operations just over a 
year ago. 

Even more than the decision an- 
nounced by Coca-Cola two weeks 
ago to merge Columbia with Tri- 
Star Pictures and spin it off as a 
separate company, the thinly- 
disqinsed garlring of Mr Puttnam 
was an admission that Coke’s origi- 
nal strategy had gone badly wrong. 

The spinoff of the entertain- 
ments business could, on its own, 
be presented as a lucrative finan- 
cial manoeuvre which would benef- 
it both the parent company’s bal- 
ance sheet and its shareholders at a 
time when Wall Street puts a much 
lower value on conglomerates than 
on “pure" companies, which devote 
themselves to one business at a 


In purely financial terms, ana- 
lysts have judged Coca-Cola's foray 
into the entertainments business to 
have been a perfectly respectable 
investment yielding after-tax prof- 
its of around $3 00m over five years 
on a total cash investment estimat- 
ed at around $745 dl 

Mr Puttnam's removal however, 
is a reminder that the profits have 

David Puttnam 

been as much a consequence of Co- 
ca-Cola's good luck as its good 
judgement In particular, it shows 
that very tittle has come of the orig- 
inally-trumpeted strategy of apply- 
ing solid conventional business 
practices to the mercurial and self- 
indulgent world of Hollywood. 

Coke's initial hope was to make 
its mark on the film business with 
its consummate *trin< at marketing. 
Coke believed that it could use its 
buying power and tactical experi- 
ence in the advertising business to 
cut Columbia's marketing costs and 
thereby automatically boost the 
profitability of its films 

It soon found, however, that its 
experience in selling soft drinks. 

MCA may build Europe theme park 

MCA, the Los Angeles-based enter- 
tainment group, has examined the 
possibility of building a theme park 
in Europe at an estimated cost of 
more thaw $500m, Mr Charles Paul 
vice president, told Reuter in Los 

“We have been looking at a lot of 
opportunities in Europe," be added. 
MCA, which has recently been at- 
tempting to compete with Walt Dis-‘ 
ney in the theme park business, 
had narrowed down the sites to 
either Paris or the Spanish coast. • 

MCA competes with Disneyland 
in southern California with its mo- 
tion picture studio tour in Universal 
City near Los Angeles. 

The company also plans to com- 
plete a theme park on a 440 acre 
site in Orlando, Florida in file au- 
tumn of 1989. The park would com- 
pete with the Disneyworld and Ep- 
cot Centre complex, also in Orlan- 

“We do very well in the same 
places as Disney," Mr Paul said. 
“We’re recognised as the only world 
dara alternative to them.” 

Earlier this year, Disney signed , 
agreements with the French Gov- 
ernment involving a planned Euro- 
Disneyland theme park at Marne- 
la-VaHee, about 20 miles east of Pa- 
ris. The project has an estimated 
overall cost of about $L6bn and Dis- 
ney expects to open the complex in 

Mr Paul said it was not unreason- 
able to expect that MCA’s European 
park could be opened the same 
year. The project would be paid for 
through stand-alone finanring ar- 
rangements,.-. .... 

was little use in attracting audi- 
ences. As Mr George Thomson, an 
analyst at Prudential Bache points 
out, “soft drinks are all basically the 
same, so the key to success of a soft 
drink is the strength of the market- 
ing support behind it” 

But movies axe all different, as 
Coke found to its cost Mr Putt- 
nam's appointment represented the 
next stage in Coke's attempt to turn 
Columbia around by conventional 
business means - in this case by 
bringing costs under control. 

From the beginning Mr Putt- 
nam’s main problem in Hollywood 
has been his insistence that suc- 
cessful films could be made with 
relatively low budgets and without 
indul ging too many of the whims 
and monetary ambitions of big 
name superstars. This was a view 
that found natural allies atCocarCo- 
la headquarters in Atlanta, where 
man agement was naturally inclined 
to think that a fla gg in g business 
should try to improve its perfor- 
mance by cutting costs, rather than 
boosting them. 

With Columbia now under the 
control of Tri-Star's chairman, Mr 
Victor Kaufman, the studio will not, 
of course, be trying to increase 
spending. But the economies are 
not likely to be attempted quite so 
controversially and prominently at 
the expense of stars like Bill Cosby, 
Warren Beatty and Sylverster Stal- 

Power Corp in 
joint venture 

By Robert Glbbens 
in Montreal 

da, the financial services and indus- 
trial group controlled by Montreal 
financier Mr Paul Desmarais, is 
joining Imasco and several other 
large companies in Sutter Hill Ven- 
tures, a venture capital partnership 
investing in high technology firms 
mainly in the US and based in Cali- 



Determined banking 
throughout 1987 

Highlights of 
Bayerische Vereinsbank Group 
as of June 30, 1987 



(DM billions) 

ions) total 

due from 

due to 

bonds Issued in 
long-term loan 






Bayerische Vereinsbank AG 
Head Office 
International Division 
Kardinal-Fiaulhaber-Strasse 1 
D-8000 Munchen 2 
Telex 52 861-0 bvd 


Lion in Irani of the former Munich Royal Palace 

Our in te rna tion al network: Athens. Atlanta. Selling. Budapest, Caracas, Chicago, Cleveland. Grand Cayman. Hong Kong, Johannesburg, 
London, Los Angela. Luxembourg, Madrid. Manama (Bahrain), Milan, Modena, New York. Paris, Rio de Janeiro, Sao Paulo, Tehran, Tokyo. Zurich. 




Barclays de ZoeteWedd is pleased 
to announce that from September 21st its newly 
licenced branch in Tokyo will be 
trading in Japanese and foreign securities. 
Barclays de ZoeteWedd is one of 
the larger foreign securities houses in Japan, 
traxiing from new premises in: 

Shin-Kasumigaseki Building, 18F 
3-3-2 Kasumjgaseki 
Chiyoda-Ku, Tokyo 100. 

Telephone: (010.8L3) 591 0890. 

Telex: (72) 2223983. 

Pax: (010.8L3) 591 0882. 

Telephone enquiries in London to 01-623 2323. 



This announcement appears as a matter of record only. 

August 1987’ 


Theragenics Corporation 

Common Stock 

. - -Tbe-undecpflned actedas tetroductoc Bro kar for J heramnics Corporation 
in arranging the'private placement of these securities with 
selected European institutional investors. 

E F. Hutton & Company (London) Limited 


IntciHAineriqui Development Bank 

35900900900 Japanese Yen 8 5 A% Japanese Yen Bonds of 1981. doe November 1, 198} 
Japanese Yea 15,000000,000 VhVt Bonds of 1983, dne 15th November. 1993 
159009009QO Japanese Yfen V/tVk Japanese Yfen Bonds of 1984, due September 28, 1994 

International Beak for Reconstruction and Development 

Japanese Yfen 25^X50,000,000 %n Bonds of 1985, due April 23, 1990 (Eighth Hue) 
Japanese Yfen 20,000,000900 8 J AV» Yea Bands of 1981, due Jftbrnary 20, 1991 
Japanese Yfen 2QflOO,QOOJWO 8% Yfen Bonds of 1983, due Match 4, 1993 
Japanese Yen 20,000,000,000 ?<*, Yen Bonds of 1984. due April 27, 1994 CSboh Issue) 
SV-flb Yen Bonds doe August 7, 1990 (Tenth Issue) 

New Zealand 

15,000,000,000 Japanese Yen Japanese Yfen Bonds of 1981, due 15 December 1987 
15,000,000,000 Japanese Yen V/t*h Japanese Yen Bonds of 1983, due IS September 1989 
15,000,000,000 Japanese Yen l'h*h Japanese Yea Bonds of 1984, due 20 November 1990 

NOTICE IS HEREBY GIVEN that The Bank of Tokyo (HoDand) N.V* 
acting as Faying Agent for the above mentioned bonds or notes, has 
moved its office. The new address is: 

Work! Trade Center 
Strawinskylaan 565 
1077 XX Amsterdam 

Dated September 18, 1987 

The Bank oF Tokyo, Ltd. 
as fiscal Age# 



Biotechnology Venture Fund S.A. 

has raised 

U.S. $50,000,000 

through a private placing for investment 
in biotechnology and health care 

Investment advisers; 

Abingworth Management limited 

26 St James’s Street, London SWlA IHA 
Telephone: 01-839 6745 Telex: 946066 Fax; 01-930 1891 

September 1987 

financial Ernes Friday September 18 1987 


group bays 
bank shares 

By Tom Bums in Madrid 
Gmpp March, (he prestigious 
Spanish Financial group 
whose hanking arm Is asso- 
ciated with the National 
Westminster UK clearing 
bank, has in recent trading 
sessions on the Madrid bourse 
bought up some 2 per cent of 
Banco Hispano Americano, 
the fourth largest domestic 
bank in deposit terms. 

The March group thus 
becomes one of Hispano .. 
major shareholders, although 
it is well short of the 16 per 
cent held by Commerzbank 
which entitles the West 
German bank to a seat on 
Hispano Americano's board. 

The admission came amid 
reports that a second com- 
pany, Ron Investment, which 
la a Spanish subsidiary of the 
Swisohased Financier Mare 
Rich, had also bought 2 per 
cent of Hispano Americano. 

The bank said conversa- 
tions had recently taken place 
between Hispano Americano 
and the Marc Rich group but 
that the alleged share buying 
spree by the latter had not 
been detected by the bank. 
Ron Investment declined to 
comment on the reports. 

The newly revealed March 
In Ttlupanft 

was characterised In Madrid 
banking circles yesterday as 
being “ friendly." 

Hispano Americano, having 
overcome troubles in 1984-85 
which forced it to withhold 
dividends and which brought 
in a new management team, 
has advanced steadily this 
year. It posted first half pre- 
tax profits of Pta S.6bn 
($70 8m), a 20 per cent 
increase on 1986, 

The flurry created aver 
balk share buying in Hispano 
Americano comes on the 
heels of operations by the 
Kuwait Investment Office 
which has acquired a 6-5 g?r 
cent share in Banco Central. 
Spain’s hugest private bank 
in deposit terms, and a 4-6 
stake in Banco de Vizcaya, 
the sixth ranking bank. 

Campsa in drug 
store venture 
with 7-Eleven 

By Our Madrid Correspondent 

CAMPSA, the Spanish petrol 
pump company' whose mono- 
poly status formally ended 
with Spain’s -entry into the . 
EC, has antidpated the im- 
pending challenge -oF Euro- 
pean competition by announc- 
ing a joint venture with the 
Southland group, of the US, 
that will introduce the 
7-Eleven petrol station drag 
store chain to Spanish 

The venture, valued at 
PTA 51m ($41m), will give 
Campsa a 60 per cent stake. 
It involves the creation of 206 
shopping and cafeteria com- 
plexes — mostly concentrated 
on motorways and city by- 
passes — by 1992, the year 
when EC companies will be 
able to operate without res- 
triction tn Spain. 

Southland has previously 
entered similar ventures with 
Mobil and Shell in the US and 
in Canada. The agreement 
with Campsa marks its first 
retailing operation in Europe. 

Companies limited 

(Incorporated with brated 
liability under the laws of Canada) 

05- SZOOOOOOO Boating Rue Notes 
kmc dm Bib Man* 1987 
Maturity date Ukfa Man* I99Z 

Ear the direr month interest 
period from J8ch September 1987 
to 18th December 1987 (be rate 
of interest on die notes wifl be 
7 9/1 8* per annum. The Interest 
payable on the relevant Interest 

paymen td*ie will be U5.S9358.16 

per US 5500,000 note. 

Morgan Grenfell & Co. limited 
Adereace Agent 

U5$ 180400400 

Guaranteed Hooting Rate Notes 
due 1973 

Notice Is hereby given that for 
the interest period 18th Sep- 
tember, 1987 to 18th December, 
1987 the interest rate has been 
fixed at 7{f%. Interest payable 
on 18th December, 1987 will 
amount to US$19432 per 
US$10,000 Note. 

Agent Bank: 

Morgan Guaranty Trust 
Company of New York 

US$160, 000,000 
Floating Rate Subordinated 
Notes due 2005 

Notice is hereby given that for 
the interest period IStfi Sep- 
tember, 1987 tp 18th December, 
1987 the interest rite has been 
fixed U 7tf%. Interest payable 
on T8th December, 1987 will 
amount to US$197.48 per 
USS10900 Note. 

Agent Bank; 

Morgan Guaranty Trust . 

Company of New York 

CCF turns in buoyant 
first-half net earnings 


THE recently privatised French 
banking group. Credit Commer- 
cial de France (CCF), made a 
net profit of FFr 214.5m ($35m) 
in the first half of 1987 sad ex- 
pects a “ satisfactory increase’* 
in earnings for the year. 

CCF*g first-half earnings were 
19 per cent more than in the 
corresponding period last year, 
but no proper comparison is 
possible because of the change 
in the group’s s truc t u re, which 
absorbed the former holding 
company into the main operat- 
ing arm. 

Mr Michael Feberean, presi- 
dent of CCF, said the group 

had limited the development of 
its activities in the debt 
markets and reduced its inter- 
vention is the Euromarkets 
because of the international 
outlook for interest rates and 
exchange rates. 

Cep’s traditional credit activi- 
ties, however, grew substanti- 
ally, with lending to French 
customers rising more than 
10 per cent from the same 
period of 1986- 

Medftzm- and long-term cor- 
porate lending, up 19 per cent 
picked up again from its 
trough, while personal loans. 

up 23 pet cent, continued to 
grow strongly. 

Commissions on ba nking and 
fij pmitifli services rose substan- 
tially and accounted for mo re 
than a third of group net bank- 
ing Income, but m a r gin s on 
leading narrowed. 

Group gross operating profits 
rose fay an estimated 15 per 
cent, to FFr 9439m, with net 
banking income up 79 per cent 
and general expenses up 49 per 

The bank raised its cus t o me r 
and country risk provisions by 
9 per cent, to FFr 604m. 

AEG expects to hold profits 


German electrical and electro- 
nics company which is con- 
trolled by DafanderiJenz, will 
not show any dramatic improve- 
ments over the next few years, 
Mr Heinz Du err, the chairman, 

At the company's plant in 
Konstanz, south-west Germany, 
Mr Duerr said AEG expected 
profits in 1987 to be similar 
to those of last year. In 1988, 
the company produced an 
operating result of DM 130m 

turnover of 

(3719m) on 
DM ll-2bn. 

This year, turnover would 
grow to just under DM 12 bn, 
Mr Duerr said. While domestic 
business had increased, exports 
were down. The export order 
inflow in the first eight months 
was 15 per cent lower and 
export sales showed an 8 per 
cent falL 

The total order inflow up to 
August was 4 per cent lower, 
at DM 7.75bn, although at 
DM Tbn turnover was 5 per 
cent higher. While exports 
were down, business by AEG 

operations outside Germany had 
improved, especially in 
Austria, Turkey and Argentina. 

Mr Duerr said that AEG 
would continue to use profits 
to bolster its financial position. 
Thus there would- again be no 
dividend for this year. 

In 1986, AEG, which was 
nearly bankrupt in the early 
1980s, reported no net profit, 
having made special provisions 
to strengthen the balance sheet 

Mr Duerr gave no indicate □ 
as to what level of profit he was 
aiming for and when dividends 
might again be paid. 

Akzo confirms deal with Sara Lee 


jobs would be trimmed during 
the next two to three years. 

AKZO, the Dutch chemicals and 
fibres group, confirmed yester- 
day that it is selling its con- 
sumer products division to Sara 
Lee Goiporation of the US, a 
leading consumer goods com- 
pany, for about FI L25bn 

The consumer products divi- 
sion, which as jointly owned 
with Royal Dutcfa/ShcH, as to 
be merged with Sara Lee’s 
Dutch subsadhoy, Douwe 
Egberts, a leading purveyor of 
coffee, tea and tobacco. 

The merged company would 
have mnmfl turnover of 
FI 59bu and employ 11.300, 
although about 4 per cent of the 

Also said the possible sale 
would be in hoe with its 
strategy to co ncentrate on its 
mainly technology -orie nted core 
businesses. In recent years Oe 
company has focused increas- 
ingly on specialty chemicals, 
advanced fibres, pbamneeati- 
cals and specially coatings. 

The company said the pro- 
ceeds of the planned sale would 
be viewed as an extraordinary 
gain to compensate for the good- 
will paid earlier for acqulsi- 
tions. It would not affect 1987 

Last month Akzo completed 
tiie purchase of the specialty 
chemicals business of Imperial 
Chemical Industries' Stauffer 
Chemical company for -8625m, 
the biggest acquisition in the 
company's history. 

The consumer products 
division is 51 per cent owned 
by Akzo, which manages the 
activities, and 49 per cent by 
Royal Dutch? Shell, the Anglo- 
Butch oil giant 

It ' sells ’ food, health care 
items and cleaning agents In 
western Europe under brand 
names such as Mayoiande, 
Dayvis Rector, Zwitsal and 

chief takes 
top job at 

By Andrew Fisher in Fwnktart . 
CONTINENTAL, the West Ger- 
man tyre and rubber products 
company which is expanding 
rapidly overseas, yesterday 
ann ounced the appointment of 
a new chairman to replace Mr 
Helmut Werner, who is joining 
the Daimler-Benz board. 

Mr Horst Urban, 51, cur- 
rently finance director, will 
move to the top job on Novem- 
ber 1» when ' Mr Werner joins 
Pa lmie r. He wti retain the 
finance portfolio, hut shed 
direct responsibility; tor pur- 
chasing rad associate com- 

This appointment of Mr 
Urban to replace Mr Werner, 
also 51, was generally expected. 
He had been a candidate for 
the chairmanship five years 
ago, when Mr Werner was 
appointed.. Moving up to be- 
come deputy chairman is Mr 
Wilhelm Boxgmann, 58, who is 
in charge of tyre technology. 

= Mr Werner will be the board 
member responsible for Daim- 
ler’s hard-pressed truck sector. 
Hie was appointed to Daimler 
as .part . of the. management re- 
shuffle which ■ led to the con- 
troversial replacement as 
chairman of Mr Werner Breit- 
schwerft by Hr Edzard Reuter. 

Continental's profits have re- 
covered strongly after its diffi- 
cult period in the 1970s. It has 
recently moved deeper into the 
US with the 8650m purchase ot 
General Tire. 

Belgian stores 
group ahead 

By Tim Dickson la Bnmeb 
G&XNNO-Btt, Belgium’s largest 
retailing group, announced yes- 
terday that sales in the six 
months to July had inched 
ahead to BFr 63.8bn ($L69bn), 
from BFr 63bn in the corres- 
ponding period last year. 

The company, which did not 
reveal any profit figures for the 
period, commented that the 
Increase was due to a re- 
organisation. This increase cor- 
responds to the budget and 
long-term development plan. 

A breakdown of sales shows a 
fairly even performance. Speci- 
alty retailing and franchising 
did slightly better than last year 
but the traditional department 
store business was 3 per cent 

- U& $150,000,000 . 


Floating Rate 

Subordinated Notes Due 2009 

Interest Rata 
interest Period 


o per annum 

18th September 1987 
18th December 1987 

Interest Amount due 

181ft December 1987 

per U.S. $10,000 Note ’ US. $199.06 

per US. $50900 Note US. $99591 

Credit Suisse Krst Boston limited 
Agent Bank 

u& $ 100 , 000,000 

Takngin International (Asia) limited 

Guaranteed Floating Rate Notes Due 1994 


Guaranteed as to payment of principal and interest by 

Hie Hokkaido Takushoku Bank, limited 

Interest Rate 

interest Period 

Interest Amount per 
U.S. $10,000 Note due 
18th March 1988 

8 Vl 6 % per annum 

18th September 1987 
18th March 1988 

U.S. $41392 

Credit Suisse First Boston Limited 
Agent Bank 


nSJXOfiOOfiOO 2'A per oafi. Cometibk: Bonds Due 1995 

as IPayto* »d C O BMB ' limi «HB far the tfwt uM M . i.'M Hmwj h n« ri in wayi 
it. specified offiee « indicated Wow: w "” twp 


Dated September 18, 1987 

NJahinbo Industrie!, lac 
By: The Bank of Tbkyo, Ltd. 
as Dcbcrseme nl Agent 


Banco Mexfcano Somex S.N.C. 

floating Rate Notes Dne 1991 

Xh accordance with the pxovtmons of the Fiscal Agency Agree- 
ment between Banco Mexfcano Somex S.N.C. and Fust 
Interstate Capital Markets' Limited, dated as of 4th Septem- 
ber, 1986 notice is hereby given that the Rate of Interest for the 
next six month Interest Period has been fixed at 8%% p.a. and 
that the interest payable on relative Interest Payment Date, 
18th March, 1988 in respect of U.S. $100,000 nominal amount 
of the Notes wiH be U.S. S4.486.8L ' 

Reference Agent 

Capital Markets Umited 

18th September 1987 

US $100900900 

Anib Banking Corporation (B.S.C.) 
Floating Rate Notes Due 1996 

Interest Rate 

SVa% per annum 

Interest Period 

18th September 1987 

Interest Amount per 

U.S. $10900 Note due 

18th March 1988 

18th March 1988 

U.S. $417.08 

w ! 5 I§CHAFT A.G. 



Subordinated Booting Roto Notes dim 1990 


roped of US jT 0900 nomhoi oflha Notes wS be U 54423.40 
September 78, 1987, London i-tmn a a 




Financial Times Friday September 18 1987 



“^Hi, NTT share sale 



^SS S 

*a of jfrSj . 


•> sovhi dJ-rJ 1 


nip ahead 

=n fiieken in ^ 

“4- £**5- Z5MSW 
s^h: a in 
4 -9 J-ir hul 

j?. 52tm q as C 
-S ?f n&d Isss pz 
i= ? ?-oSt sgB»b 

-* <*zj q js a ; 
*«iK *fis5assi- 
— - 1 'o ‘j; bag; i 

--■2 dfcrtiopasfjjj 

i‘vm perfartsaei; 
r;-i.::!i| cziixi 
!■- tr iiaait®: 
&rassi v** 3 g. 

set for November 


THE NEXT tranche of 155m 
shores of Nippon Telegraph and 
Telephone (NTT), the Japanese 
telecommunications utility, win 
be sold by the Japanese Govern- 
ment between . November 10 
and November 12. 

Japan’s - finance ministry 
(MoF) said yesterday that the 
price of the new shares would 
be fixed on November 9 at a 
level 3:5 per cent lower than 
the NTT closing price on the 
Tokyo Stock Exchange. 

Based on yesterday's share 
price of Y2.77m ($19,370). the 
issue would be valued at 
Y5.21.2bn (S36.44bn), making it 
by fax the hugest public share 

offering ever, more than double 
the yield on the first 1.95m 
shares sold late last year by 
the Government 

Some analysts have expressed 
fears in recent days that such 
a large demand for funds in 
the market might trigger a 
rise in interest rates. 

Subscriptions for the new 
shares will be accepted from 
October 9 from some 250 securi- 
ties. firms. Foreign securities 
houses were not allowed to par- 
ticipate in the first issue, but 
this time. 35 foreign houses 
will be allocated 45 per cent 
of the issue. 

Queensland broadcaster 
buys Brisbane TV station 


A QUEENSLAND regional 
broadcasting company, which 
has made its mark in Britain 
through interests in radio 
stations, yesterday became the 
latest purchaser of a- major 
Australian metropolitan tele- 
virion station. 

Darbnss Downs Television 
paid A$12Sm for Brisban’s TVQ- 
O station, acquiring it from 
Universal Telecasters, part of 
the business empire controlled 
by entrepreneur Mr Christopher 

Mr Skase put the station on 
the market after buying the 
three Channel Seven stations in 
Brisbane, Sydney and Melbourse 
from the Fairfax group for 
A$780m. Under ownership roles 
a company cannot own two 
stations in one centre.. ■ . 

For Darling Downes, which 
will pay an A$25m deposit now 
and the balance interest-free by 
July 1991, the purchase repre- 
sents a significant expansion. 

The group has a television 
station In Toowomba, near 
Brisbane, and a stake in Rock- 
hampton Television on the cen- 
tral Queensland coast. 

The latest acquisition will re- 
sults in a strong regional spread 
based on a foundation pro- 
vided by the Brisbane station’s 
links with the Channel Ten 

Darling Downs is a significant 
investor in British commercial 
radio, with a large stake in the 
London-based news station LBC 
and interests in numerous other 
regional commercial stations. 

In April the group also 
bought a stake in a British 
video production company which 
operates in the corporate video 

Yesterday’s deal nets Uni- 
versal Telecasters a handsome 
profit It bought the Brisbane 
television station in 1984 for 



AM profits to A$67m 

dustries (ANI).-an engineering 
and manufacturing company, 
has revealed an 18 per cent 
rise in operating profit after 
tax to A$67.1m (US$49 5m) in 
the fiscal year ended June 30 
from A$5&Am a year ' earlier, 
AP-DJ reports from Sydney. 

Turnover rose 15 per cent to 
A$1.46bn from A$157bn. 

The profit includes AN Ts 

share of results of associated 
companies, but these were not 
detailed in the report 

After accounting for extra- 
ordinary earnings, overall profit 
rose 22 per cent to A$695m 
from A$56.6m. ANI earned an 
extraordinary profit of A$25m 
in the latest fiscal year, from 
selling some businesses. 

Earnings per share rase to 
18.6 cents from 16.7 cents 

Sony to acquire Fairchild plant 


SONY, THE Japanese elec- 
tronics group, Is to' buy a 
microchip manufacturing plant 
in southern Japan, which was 
build three years ago by Fair, 
child, the US semiconductor 
group, Sony said the purchase 

was part of its -plan to increase 
production of indu 

-jdustrial eleo 

tronics, thereby cutting its 

dependence on consumer elec- 

since tt was acquired in 1979. 

TOe sale to Sony would rid 
Sdfiumberger of one of the last 
Fairchild assets it still owns. 
It announced on agreement to 
sell the bulk of the company 
ibis month to National Semi- 
conductor, the leading US chip 
maker. The Nagasaki plant was 
not included in the planned 

It is buying the pfbuvtfrom 
Soblumbeiger. the French oil 
services company and Fear- 
child’s parent. Sctthunberger 
recently agreed to se* Fairchild 
which has suffered losses ever 

Earlier tins year, an agreed 
sale of FajjchiiJd to Fujitsu of 
Japan was blocked by the US 
Government on security 
grounds. Sony said yesterday 
K was buying the Nagasaki 
factory, which employs 230 

people, in order to expand its 
output of semi-conductor 

The company, which expects 
to produce just YSObn-worth 
($554m) of integrated circuits 

in the 1987-88 financial year 
out of Japanese total of nearly 
Y2,600bn, would have found it 
difficult to expand output at its 
existing plants because of pres- 
sure from the Ministry of In- 
t erna tional Trade and Industry. 
M1TI imposed informal controls 
on semiconductor makers in re- 
sponse to 'angry complaints 
from the US, accusing Japanese 
companies of dumping. 

The Nagasaki factory only 

assembles integrated circuits. 
Sony intends to start producing 
semiconductor components 
using machinery which is 
already installed. The factory 
produces 13m bl-polar inte- 
grated circuits each month- 
chips which are used exten- 
sively in controlling consumer 
and industrial andlo-visual 
equipment. Sony said its own 
output of such circuits was 
“ over 10m a month." both for 
use in Its own products and for 
sale to other electronics manu- 
facturers. Total Japanese out- 
put of bi-pol ar circuits is about 
600m a month. 

Investments lift Kirin result 


biggest beer maker, has pro- 
duced a 7.6 per cent increase 
in interim pre-tax profits to 
Y46£6bn ($3456m). thanks to 
bigger profits from Zaitech, the 
controversial investment of 
surplus funds in financial 

The risks involved in Zaitech 
were highlighted last month 
when Tateho Chemical Indus- 
tries, a speciality chemicals 
maker, was forced to turn to its 
bankers for a financial rescue 
after It suffered heavy losses 
trading stocks and bonds. 

Kirin's results emphasise the 
importance of Zaitech profits to 
many companes. The brewer’s 
operating profits rose just 0.7 
per cent, a fraction of the in- 
crease in the pre-tax figure. 

Kirin is suffering from fierce 
competition in the bear market, 
where its sales rose only 45 
per cent In the six months to 
the end of July, compared with 
an overall increase in the mar- 
ket of 9 per cent 

Kirin's profits are also being 
held back by increased spending 
on research and development in 

pharmaceuticals, into which the 
company is diversifying. 

Anticipating further intense 
competition in the second half, 
Kirin forecast modest profit and 
sales increases for the year. 

For the first half, sales were 
Y686bn, against Y651bn. net 
profit was Y16.9bn against 
Y15.8hn and the dividend was 
unchanged at Y3.75. For the 
full year, the company fore- 
casts sales of Y1570bn com- 
pared with Yl,222bn, pre-tax 
profits of YSlbn, up from 
Y79.3bn and a dividend of Y7.5 
against Y9. 

Commodity dealer moves ahead 

a Malaysian commodity and 
■plantations concern, said pre-tax 
profit for the first six months of 
the year climbed 61JL per cent 
to 13.5m ringgit ($ 2 . 52m) from 
8.4m ringgit in the same period 
of 1986, AP-DJ reports from 

The company said operating 
fits in the period surged to 
Bm ringgit from 598,000 



ringgit in the previous half 
year, bat investment income 
dipped 425 per cent to 4fim 
ringgit from 7.8m ringgit. With 
little change in taxes and no 
extraordinary items of any sig- 
nificance, attributable profits 
were 9m ringgit up 95.6 per 
cent from 4.6m ringgit in the 
1986 period. 

The company attributed the 

improved earnings picture to 
higher prices obtained for all 
Its commodities with the excep- 
tion of cocoa. 

The company also said in- 
creased production in the 
second half will be counter- 
balanced by lower investment 
income, but nevertheless pre- 
dicted a further improvement in 
profit during the period. 

Brierley Investments in cement deal 

(BIL) of Near Zealand has 
bought the Racbwhite family 
interests in cement, transport 
and concrete for an undisclosed 
sum. Renter reports from 

Mr Paul Cofiios, BIL chief 
executive and Mr Ken Bowdl, 

managing director of the Rich- 
whites’ David Lloyd Group, said 
that the Commence Commission 
had approved the sale. 

The statement said the sale 
followed tiie recent disposal to 
W. Stevenson mid Sons of the 
David Uoyd interest in Auck- 
land concrete operator United 

Concrete and completes the 
Richwhkes' planned divestment 
from the concrete sector. The 
David Lloyd group has retained 
its coal industry interests. 

Brferlcy’s fully-owned sub- 
sidiary Winston e recently took 
full control of former listed 
company Golden Bay Cement. 

Gold Fields to 
split shares In 
five offshoots 

By Our Financial Staff 

Africa Is proposing to split 
the shares of five South 
African subsidiaries later this 
year to improve marketing 
prospects, according to a 
statement Issued in New York 
by Consolidated Gold Fields, 
which owns a small percent- 
age of the company. 

Analysts in New York said 
the move was probably a 
part of a continuing restruc- 
turing of South African 

Cons Gold said share- 
holders will be asked to vote 
on the plans at their respec- 
tive annual meetings. 

Under the plain 

• Issued shares of Doorn- 
fontein Gold Mining would 
increase to 46m from 16m 
while authorised shares would 
rise to 45m from 165m. 

• Issued shares of Driefon- 
tein Consolidated would rise 
to 264m from 162m and 
authorised shares would In- 
crease to 226m from 116m. 

• Issued shares of Lfltanon 
Gold Mining would rise from 
8m to 46m and authorised 
shares to 45m from 8m. 

• Issued shares of New Wits 
would rise to 235m from 
11.6m and authorised shares 
to 36m from 12m. 

• issued shares of Venters- 
post Gold Mining would rise 
to 205m from 5jLm and 
authorised shares to 25m 
from 5.1m. 

The changes would result 
in an increase in capital for 
each subsidiary except Drie- 
fontein where there would be 
no change. Gold Fields listed 
various dates In November 
and December for listing 
shares and amtnnl meetings. 






The Government of the Republic of France have announced 
the intended privatisation of Compagnie Financiers de Suez, 
to take place at the beginning of October 1987. 

Under theterms of the offer for sale, previous employees 
of members of die Group with a cumulative service of 5. years 

or more are entitled to certain preferential terms which indude 
a discount on the issue price 

If you have previously served a total of 5 years with 
Banque Indosuez) French Bank of South Africa or any other 
member of the Group mentioned below and wish to obtain 
further information, please contact: 

Me David Grove, 

Manage; Human Resources, 

Banque Indosuez; 

52-62 Bishopsgate, 


Telephone 01-638 3600 

(Suez Canal Company) 



Undated Floating Rate Primary Capital Notes 

■ TOO pare 

Notice is hereby given that the Rate of Interest has been fixed at 

8-375% jxa. and that the interest payable on the relevant Interest 

Payment Date, March 18, 1988 against Coupon No5 in respect 

of U5JI0D00 nominal of die Notes wM be UJLS423-40. 

September 18 , 1987 , London _____ - 

By. Gtibanic, NLA. (CSSI Dept.), Agent Bank OTIBANKO 




r.-i SNC sstS 

rt non 

rv ' _ 

„ ip’. ; 

- '* ■ rt v-'rfOl 1 



The Hammerson Property Investment 
and Development Corporation pic 

Received debt ratings of 
PI (Short Term) 

Al (Long Term) 

from Moody’s Investors Service 

Morgan Guaranty, subsidiary of 
J P. Morgan & Co., acted as financial advisor to 
The Hammerson Property Investment 
and Development Corporation pic 
. during the rating process 



Prudential Corporation pic 

Received a 

long-term debt rating 



from Standard & Poor’s Corporation 

Morgan Guaranty ; subsidiary of 

J. P. Morgan & Co., acted as financial advisor to 

Prudential Corporation pic 

during the rating process 




t . -- ’ 

Financial Times Friday September 18 1987 


Sweden launches $350m 
issue as market calms 


five-year bond into the Euro- 
dollar bond market yesterday, 
as the US dollar bond market 
showed signs of stability after 
Wednesday's choppy move- 

After deciding not to go 
ahead with the issue on 
Wednesday, Credit Suisse First 
Boston launched it at 59 basis 
points over the equivalent US 
Treasury, giving it a coupon of 
93 per cent and a price of 101*. 

The bonds, quoted at a dis- 
count less than its 15 fees in 
the grey market, were said to 
be fairly priced, although there 
was some lack of enthusiasm 
fbr the issue, much of it bora 
out of the general lacklustre 
tone of the bond market and 
the fact that there was no short- 
age of five-year paper. 

Nevertheless, CSFB said the 
issue, which had been expected 
for much of the week, bad been 
syndicated In 50 minutes and 
the placement was going well. 

CSFB said that the SI bn 
three year issue the firm 
brought for Italy on Monday, 
priced at 60 basis points over 
the Treasury, was now out of 
the primary market and into 
secondary trading. In the 
absence of CSFB support, the 
issue was still trading at 57 
basis points over the Treasury, 
indicating the underlying 
strength of demand. CSFB said 
it had placed over three- 
quarters of the issue and there 
had been no significant under- 
writing costs. 

Hie only other issue in 
dollars was a S75m convertible 

for Keppel a Singapore-quoted 
ship repairer in which the 
Singapore Government has a 
60 per cent stake. 

Brought through Morgan 
Grenfell, the issue carried an 
indicated coupon of 23 per cent 
a 10-year maturity and an indi- 
cated conversion premium of 
4 to 6 per cent A convertible 
brought earlier in the year for 



the company is trading at over 
a 25 per cent premium. 

Salomon Brothers brought 
the latest of its sterling mort- 
gage-backed securities deals, in 
the name of TMC Mortgage 
Securities No 3. With a final 
maturity of 2015 and a n ex- 
pected average life of five to 
seven years, the issue carries 
an initial spread over the 
London inter bank offered rate 
of 3 point rising to 1 point on 
the 10th anniversary. 

A convertible for A- L. Wil- 
liams of the US was increased 
to $70m from S60m, the 
coupon fixed at 4.5 per cent 
and the conversion premium set 
at 2 per cent, agent broker 
Nivison Can trade said. 

Traders said some of Wed- 
nesday^ issues in New Zealand 
dollars had fared rather better 
yesterday, although the general 
level of demand from retail 
investors for such currencies 
had fallen. 

Morgan Guaranty launched a 
C$75m five-year issue for the 
City of Vienna, carrying a five- 
year maturity, a coup of 115 per 
cent and a price of 1015. The 
issue was priced at 50 basis 
points over the equivalent 
Canadian Treasury bond, and 
the lead manager's indication 
meant it was within fees. 

In West Germany bond prices 
firmed about 13 point in thin 
trading. A DM 2tm ten-year 
bond was announced by the 
Federal Post Office, priced at 
995 with a 65 per cent coupon 
to yield £82 per cent and was 
well received as the terms were 
slightly more generous than ex- 
pected. It was bid 80 basis 
points below issue price. 

In Switzerland, foreign bond 
prices were mostly unchanged. 
Japan Finance Corporation’s 
SFr 100m 14>year 5 per cent 
issue ended its second day’s 
trading at 97, 2 | points below 
issue price — a better perform- 
ance than some recent issues. 

Group Andre Perry, a Cana- 
dian audio and visual recording 
concern, made a convertible 
issue of up to SFr 25m led by 
Banque Zhdosnez. The coupon 
for the eight-year issue has been 
set at 55 per cent and the con- 
version premium was indicated 
at 10 per cent. The issue was 
well received, bid 15 points 
above issue price in the grey 

Chas e Manhat tan Bunk 
(Suisse) is today expected to 
disclose details of a SFr 50m 
five-year issue for Denmark, 
carrying currency warrants. 

opens floor 
for evening 

Richard Waters on a world-wide headache for the revenue authorities 

A taxing problem for global trading 

: ; lii 

By Deborah K wptiw in New 

Japan to ease issuing rules 

Exchange joined the rush 
among US futures and options 
exchanges to capture Far 
Eastern business when it 
opened its floor for as evening 
trading session on Wednesday. 

The exchange is trading 
three of its highly successful 
foreign currency options con- 
tracts and accompanying 
futures in a 7 pm to ll pm 
session. Volume on the Aus- 
tralian dollar, yen D-Mark 
contracts readied some 2 fi 00 
lots in Wednesday's opening 
session in what Mr Nicholas 
Giordano, president of the 
exchange, described as a good 

u rm confident that lfs the 
right idea," he said, "though it 
may be a year or two early." 

Mr Giordano looked forward 
to the day when the floor in 
Philadelphia would be open 
round the dock. After trying 
to forge a link with the London 
Stock Exchange for over two 
years, be had all but given up 
on the idea of using that as a 
way to extend trading hours. 

The exchange says it is now 
considering specific products 
suited to night trading, such as 
a New Zealand dollar options 

Next week; the exchange will 
begin trading options on a new 
utility stock index comprising 
20 bine-chip power company 

So far, the only other US 
echange to go ahead with a 
night trading session is the 
Chicago Board of Trade, 

THE TAXATION of profits on 
global securities trading . is 
stretching the imaginative 
resources of a growing number 
of fi nan cial institutions and 
their advisers. It is also fast 
becoming one of the biggest 
problems for revenue authori- 
ties in every leading financial 

centre. , , 

Unta now. it has been rela- 
tively easy to pin down profits 
earned by banks in particular 
jurisdictions— and to identify 
where they have made tax- 
allowable losses; The occasional 
o ff riai crackdown — such as that 

tinder way in London, where 
the Inland Revenue Is challeng- 
ing what it believes are foreign 
banks’ attempts to load bad 
debts onto their British sub- 
sidiaries — has done little to 
upset this calm. 

That is likely to change. The 
problem arises with securities 
that are bought in one fi na ncia l 
centre and sold in another. For 
instance, a parcel of shares 
bought in London during the 
day may be sold in Tokyo the 
same night. Yet the whole of 
the profit on the transaction 
cannot be attributed to either 

centre. __ „ 

It is a famili ar transfer 
pricing problem, given a new 
twist by the global nature of 
the securities business and the 
speed with which deals are 
done. Last year's deregulation 
in London has hastened the 
need for a solution, say the 

experts. „ . 

Mr Roger White, a London 
partner with KMG, the account- 
ing firm, says: “If you’re deal- 
ing in tangible products, yon 
can normally fix the price 
when they cross borders. 

“ Pricing procedures have 

grown up over the yuag. and 

have achieved several 
acceptance. But financial trans- 
actions don't involve tangible 
products. The attitfmtion af 
profit becomes much more aim- 

An added difficulty arises 
because most banks, unlike 
manufacturing companies, work 
through branch networks rather 
th«n separate national com- 
panies. Subsidiaries, which 
need to draw up separate 

subject of hype than actual prac- 
tice. But most banks already 
have arrangements for dealing 
around the dock, and so have 
begun to grapple with the tax 

The extent of each dealing 
room's authority to deal In the 
portfolio of an overseas asso- 
ciate is a key issue. If tire 
authority is restrictive, it can 
j ustifiab ly pJaim to be as 

a broker, and take commissions 
cm transactions it carries out. 

he attributed to the. various 
regions that contributed to it 
But a bank’s assessment on the 
value of brain power exerted 
in, say. New York on a deal 
recorded In Tokyo may not be 
the same as that of the US 
Internal Revenue Service or 
tire - Japanese Ministry of 


* What happens if die book arrives with 
a loss ia New York and a gam in Tokyo 
but no overall gain or loss? Ike parent 
would end up with a strange tax charge 9 

accounts for their operations, 
would already have tackled 
many of the questions when 
reporting national profit. 

The arrival of true global 
trading — with a bank’s entire 
po rt folio moving from one fin- 
ancial centre to the next in an 
endless circle — could intro- 
duce the greatest complexities. 

A tax expert with a UK bank 
said: "Someone who went the 
pure global r o u t e could con- 
ceivably have some real prob- 
lems. Has the bank purchased 
the global book at tire market 
value at the time it bought it? 

"And what happens if the 
book arrives with a loss in New 
York and a gain in Tokyo, but 
no overall net gain or loss? The 
UK parent of such a group 
would end up with a strange tax 
charge.” . . 

Global trading is stiS more a 

Allowing it a free hand over 
tire portfolio, however, suggests 
that it should share in the 
profits — potentially under- 
mining any commiAdon arrange- 
ment in the eyes of the tax 

Swaps pose a similar prob- 
lem. Most swaps are recorded 
in the books of tire parent bank, 
no matter where the deal was 
conceived. This is because tire 
parent usually has the greatest 
capital . resources with which to 
tofir tire deal. 

Yet the brain power that has 
gone into the deal may have 
arisen anywhere around the 
world. The "added value" that 
has given rise to tire profit may 
have been produced far from 
where the deal was officially 

In these circumstances, the 
profits arising on a deal seed to 

Internal methods of assessing 
the profits of each unit go some 
way to solving these problems. 
Dealers and otters want their 
efforts to be recognised. Their 
bonuses may provide one 
pointer to the profits of each 
national unit. 

Unfortunately it Is not so 
simple. A dealer in one country 
who raises the finance to meet 
a l oan made In another may 
make a profit on his part of the 
operation. Yet this Is not 
directly related to the final 
overall profit to the bank of 
the series of transactions. 

B has all the ingredients of 
a classic tax confrontation — 
financial institutions; c laiming 
their accounting systems re- 
flect commercial reality, while 
having more than a little in- 
terest in incurring profits where 
It hurts least, versus local 
revenue authorities, anxious to 
maximise their own tax take; 
and overseas tax authorities, 
equally anxious to make sure 
they are not losing out. 

The tax authorities of the 
largest centres have 

yet to get together to discuss 
the problems. When they do, 
the political machinations could 
be intense: after all, the 
authorities are in competition 
with each other to tax the same 


THE JAPANESE Ministry of 
Finance has decided to allow 
more companies to issue bonds 
using a “proposal system" to 
choose among underwriting 
companies that submit competi- 
tive bids, our Financial Staff 

The new system is intended 
to allow borrowers to time bond 
issues to take advantage of 
market conditions and to re- 
move some the rigidities which 
have stunted the domestic bond 
market in recent years, driving 
Japanese corporate borrowers 
to the Euromarkets. 

Such permission will be ex- 
tended to Japan’s nine electric 

power companies next month, 
an MoF official said. The power 
companies were chosen because 
they are large and credit- 
worthy borrowers. 

Tokyo Electric Power said 
yesterday that it hopes to issue 
bonds under the new system 
in the near future, though the 
size and timing of the issues 
will depend on market condi- 

Under the new system, bor- 
rowers will ask securities under- 
writers to submit detailed bids 
outlining the coupon level and 
selling price for a corporate 
bond issue, and win then select 
the most favourable proposal. 

In the past, the "big four” 

Japanese securities companies — 
Nomura, Daiwa, Njfcko and 
Yamal chi — have taken tuns as 
underwriters of corporate bond 
issues, while the issuing condi- 
tions have been decided in nego- 
tiations between the lead under- 
writer and the commission bank. 
Moreover, corporate bonds 
could only be issued on two days 
a month, usually around the 
15tt and 30th. 

In 1985, Japanese industrial 
companies raised only Y495bn 
in the domestic bond market, 
compared with Yl,395bn 
abroad, according to the Bond 
Underwriters’ Association of 

Simex considers 
options for yen 
and D-Mark 

Ecu ‘should | Montedison to raise $800m 

;f m kc 

for W 

TIONAL Monetary Exchange 
(Simex) Is likely to introduce 
D-Mark and yen currency 
options next -month, ' while 
Nikkei stock index avenge 
options may be introduced in 
November, Reuter repacta from 

Simex will introduce its first 
options c on tract, for Euro- 
dollars, on September 25. The 
contracts will be traded initi- 
ally without a mutual offset 
system, though Simex Is discuss- 
ing ways of installing one with 
the riiiagn Mercantile Ex- 



world’s third 


By Quentin Pee I In Brosieis 


This announcement appears as a matter of record only. 

September, 1967 


THE EUROPEAN c ur re n cy 
unit (Ecu) should become the 
third currency in th e in ter- 
national monetary system, 
alongside the dollar ***** tt* 
yen. according to a l e adin g 
Japanese banke r . 

To that end It must be 
developed and strengthened 
by tire member states «f the 
European * Community, Mr- 
Ynsoke Xntiwagt chairman 
of the Bank of Tokyo, told 
members of the European 
Parliament yesterday. 

He called for action by EC 
member states, including 
r e cogni sing the Ecu as an 
officially-accepted foreign cur- 
rency, completely deregulat- 
ing its use by Community 
rerid rats, and turning the 
European Monetary Co- 
operation Fund (EMGF) into 
a lender of last resort to Issue 
Ecu-denomlnated loans. 

MONTEDISON, the Italian 
chemicals concern. Is raising 
5800m is short-term finance to 
help fond the $L6hn share pur- 
chase which will give it control 
of Himont, tire US polypropy- 
lene manufacture. 

The revolving credit, bring 
arranged by Citicorp Invest- 
ment Bask, came a margin of 
\ point aver interbank 

offered rates, and a commitment 

fee of 5 per cent Its initial 
maturity is 12 months, but it is 
extendible to 18 months. 

It is expected that about half 
of the loan will be drawn, while 
the rest of the funds will 
initially be raised through exist- 
ing lines and M| *- 

Swisa Bank Corporation 
International is also arranging 
a 8400m revolving credit over 
three yean for ramerira, US 

financial services group. 

The facility includes an 
option for uncommitted short- 
term advances but tte com- 
mitted portion of tte credit 
carries a margin over Libor of 
25 basis points and a utilisation 
fee of five basis points if more 
than half drawn. 

There is a commitment fee 
of 10 basis points on undrawn 




3*A per cent. Guaranteed Notes due 1992 


to subscribe for shares of common stock of Hanwa Co. , Ltd. 

Payment of principal and interest being unconditionally and irrevocabty guaranteed by 

The Sanwa Bank, Limited 


Daiwa Europe limited 

Banca del Gottardo 

Bank of Tokyo Capital Markets Group 

Banque Paribas Capital Markets Limited 

BNP Capital Markets Limited 

Fuji International Finance Limited 

IBJ International limited 

Kleinwort Benson Limited 

KOKUSAI Europe limited 

Merrill Lynch Capital Markets 

Mitsubishi Finance International limited 

Morgan Stanley International 

New Japan Securities Europe limited 

National Securities of Japan (Europe) limited 
The Nikko Securities Co., (Europe) Ltd. 

Norinchukin International Limited 

Saitama Finance International Limited 

San wa International Limited 

Sanyo International Limited 

Sumitomo Finance International 

Swiss VoDfSbank 

Universal (U.K.) Limited 

Yamatane Securities (Europe) limited 

Hr KasbfwagTs proposals 
go wen beyond lire current 
state of thinking of EC cen- 
tral banks. The Ecu is based 
on a basket of EC cur renc i es, 
and is already widely used to 

international credits, as well 
as la central bank reserves. 

His argument is based oa 
tte premise of an interna- 
tional less of confidence in the 
dollar because of the de- 
terioration of tho US economy, 
the net external liabilities 
which he said would pass the 
SLfiOObn mark some time 
between 1999 and 1992. 

He called for a change from 
tire present dollar standard 
for the International mone- 
tary system to a system of 
multiple key currencies, 
which would consist 56 per 
cent of dollars, and tire rest 
based on the yen and the Ecu. 

Mr Kashiwagi said the Ecu 
was preferable to tire D-Mark 
as the third element in this 
system because, as a basket of 
currencies, It offered greater 
stability and because West 
Germany did not seem eager 
to see the D-Mark develop 
Into a global key currency. 

He said there should be no 
problem for EC member states 
in recognising the Ecu as an 
officially accepted foreign cur- 
rency, because It is already In 
effect a Eurocurrency In its 
own right. 

Complete deregulation of 
its use by EC residents would 
promote its use in advance of 
the eventual day, somewhere 
in tire future, when the EC 
realises its goal of unifying 
all Its c ur r en cies. 

.Turning the EMCF into a 
lender of last resort, which 
would advance Era-denomi- 
nated loans to all the 
participating countries, Is 
considerably more daring 
H»»n anything tire EC hank 
governors are currently con- 
sidering, although Mr Jacques 
Dolors, die president of the 
European Casunisriait, is con- 
vinced the move must even- 
tually be nude. 

Finally, Mr Kashiwagi called 
Air sterling to be brought into 
the e xchang e rate mechanism 
of the European Monetary 

"As long as the pound re- 
mains outside the exchange 
rate mechanism and is allowed 
to float against the Ecu, the 
greatest merit of the currency 
—that Is, stability— cannot be 
fully realised.” 

B T 3 

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Financial Times Friday September 118 1987 



Poor showing in 
US hits Reekitt 

& Colman profit 


A flat performance from the 

US held bach the advance in 
first half profits at Reekitt & 

C aiman, the internati onal food, 
drugs and toiletries group. At 
£7445m, pre-tax profits fell 
short of brokers* expectations, 
and the shares slopped 27p to 
close at 1085p. 

Matters were complicated by 
the company’s acquisition of its 
minority interest in Reekitt & 
Colman Australia. This bad the 
effect of depressing profits at. 
the pre-tax level, which took 
some analysts by surprise. 

However, after restating the 
results for the comparable 
period last year to take account 
of this change, growth in pre- 
tax profits worked out at 20.1 
per cent The 40.5 per cent tax 
charge was higher than ex- 
pected, and as a result ea r nin gs 
per share grew by only 12.8 per 
cent. to 29J7p. 

In addition, the company 
acted to dampen speculation 
about the likely profitability of 
its anti-ulcer drug. It said that 
the first phase of trials Into the 
polyacrelate polymer with H2 
antagonists would be completed 
before the end of the year — 
but that it was too early to 
judge the commercial signifi- 
cance of the product. 

In North ..America, profits 
declined from.£9.3m'4o £8-8m. 

on turnover ahead by £70m to 
£205.9m. Profits would have 
been £3-£3m higher but for 
adverse currency movements. 

Sir Michael Colman, the 
chairman, of the company, said 
that perfo r mance in the US was 
depressed by the cost of inte- 
grating Durkee Famous Foods 
into its existing businesses. 
Reekitt bought Durkee last 
year .from Hasson Trust for 
*Z20m- (£7Sm). 

- Sir Michael explained that 
-the process of integration was 
proceeding -fester than he had 
originally expected. “ The 
benefits of the merger are 
being increasingly confirmed,” 
he said. “They will feed 
through to the bottom fine in 
the second half.” 

Profits from Europe, exclud- 
ing the UK, increased by 30.5 
per cent, to £12 .2m, on turnover 
up £19 An to £172420, reflect- 
ing wbat Sir Michael said was 
the continued benefit of the 
acquisition of the Airwick 
Group in 1984. 

In the UK, sales totalled 
£L82m (£176m) and profits 
were up by £343m to £25.93m. 
The race of growth here was 
dampened by the inclusion in * 
last year's turnover of what Sir 
Michael estimated to be £10xn 
from Gale’s preserves, subse- 
quently sold. 

Melton cuts 
stake in 
Paper Mill 

By Steven Butler 

Melton Medes yesterday 
reduced its stake In Oaves 
Paper Mill below the 5 per 
cent level with the disposal 
of a 64 per cent 580,000- 
share stake in the company at 
a price dose to £2 per share. 

Helton Medes, a private 
comply headed by Hr Nathu 
Purl, last week failed in 
efforts to defeat a capital 
injection proposal tor O tires 
by Mr Michael Kent, who now 
owns a majority stake In 
Olives and has become its 

Mr Purl said ft was not In 
the interests of Olives to have 
a large Mock of shares over- 
hanging the market. 

Quarto purchases 

Quarto, the USM quoted 
book packager. Is to spend 
£L5m on two specialist 
magazines. These are “ Con- 
struction Industry Inter- 
national " and " International 
Mining,” which made pre-tax 
profits of £305,900 on turn- 
over of fit -dm in the year to 
the end of July. 

Buckley’s accepts duo’s new 


Buckley's Brewery, the small since eniaepreneor, Mr Nazznu had suggested a £10m pro* sure fron~^5 ationa !i 
Welsh brewer, ins finally given Vinm, picked up an 84 per , gramme of acquisitions and holders /; r “ 0l ?“ ei, “- Tbe 
up its fight for independence cent (wo years ago. That was investment over two years; change f£2y* ne sajfl < w* 5 
and is recommending an in- then purchased and added to by yesterday, he indicated that the due to L“ u ® * assurances on 
creased £29 4m bid from the former stockbroker, Mr Tony sums could be considerably the bre£® 5° lure ®P“ on the 
two James Ferguson directors. Cole. Having failed to win a larger. amotme^y , wer e .offering. It 

creased £29 4m bid from the former stockbroker, Mr Tony 
two James Ferguson directors. Cole. Having failed 4<o win a 
Mr Peter Clowes and Mr Guy board seat, he sold his 274 per 
Cramer. cent stake to the Cramer/ 

The duo have agreed to raise Clowes team in June, 
their terms from 185p to 192p Mr Cramer confirmed yester- 
— their second Increase— and day -that the duo intend to 

rmS Cronpagnfe 

du Midi’s 

(□mend. The offer for 

he said, was — , * . 
assurances on M |H|lfl7 
re and on the 

xi g v ii * v IfllltrU w wua u diut/llUfk * — ~ _ — - — — — — o - — * p ^ _ m _ __ _ 

board seat, he sold his 274 per Mr Cramer will join the board puts ^i^lzr'f Il lS5 0 ^2i S | en By K5ck BOTker 

cent stake to the Cramer/ as an executive director, and profltrf® w t * ro “ Compagnie du Midi, the Frenctfdmg 

Cimees team in June. Mr ^wes— currently nmnning yeartf® t0 J™* Li5i® m insurance and industrial holdraif 

Mr Cramer confirmed yester- James Ferguson— as a non- 1986/"° n t0 a histone exit ^ company published y Verticals 

their terms from 285p to 192p Mr Cramer confirmed yester- James Ferguson — as a non- 1986, 
— their second increase— and day -that the duo intend to executive. Sir Alun Talfun FE o 
yesterday Mr Cramer said that maintain production facilities Davies, a barrister and former TT 

yin crease in the offer is 2* y , boy 

Financed hv * b,ro.r i«»n document for its 400p per shareal, a 


unconditional next week. At brewery will “ remain open in become non-executive chairman, 
present, they own 314 per cent the foreseeable future and. in and Mr Colin Thomas remains 
of Buckley's shares; no figure any event, for at least three managin g director. Three other 
has been disclosed for recent years.” No redundancies are board directors will step down 
acceptances, but Hr Cramer foreseen. — including Mr Jasper Clutter- 

suggested that their total con- After assessing Buckley’s buck, a non-executive Whitbread 
trol was “fairly dose" to the systems, the new team expects director. 

^Singer and Friedlander, 2?*“ D,a 01 

JJVs advisers. About £7m **** B "tish life assurance group ormg 
being borrowed, but they Mr Bernard Pagezy, Com to he 
lj& to place back.Tacceptances pagnie du Midi's president 16 ^ 1 S* 
j 75 per cent in order to said the offer was “generous' 1 
jin the listing, enabling this and he found it “difficult to ac*'° ,c *5 
be repaid. I cept that a price of 400p doe: 

to hit the acquisition trail and 

Redland joint venture in plastein>nrd deal 

Mper TOntmaric. tol^^^si^^nd Mr Griffith Philipps, the out- Buddeys not fully vdue “Equity anceom- 

Budaev's has been the sub- is also anxious to introduce a going chairman denied yester-^^^^“““. e ““ e r price to *•*»■ *“™r 

Ject of predatory attention ever lager line. Earlier Mr Cramer day that there had been pres-r 1 * 1 Wltn almost 2m traded. ^ The offer, which has a firySP®®* 

1 dosing date of October 8, valu<? r ’ 85 

j the British company at £403m IOII ®*„ 

__ __ _ . # . . m w . I w g w Equity and Law rejected thtf - wi “ 

Redland joint venture in plastenoard deal £a©5&?/Sf 

/ Mr Ron Brierley, the New Zea 

BY ANDREW TAYLOR , / land financier. Ipper^ 

Redland, the British building formed a joint venture to attack since 1975. Plasterboard J ^ or s ** a ^ t . Compagnie du Midi's bid 

materials group, and CSR, the theEuropean plasterboard mar- of 450m square metres inf 31111 1111 ' Dlds - dudes an offer of 84 per cen~ on , 

Australian building materials, ket, twill use Norgrips initially tern Europe are forecast tdP BPB Industres, a British loan notes as in alternative tr 111 
sugar and resources group, have to import plasterboard into to 600m square metres byr‘ company, is the largest manu- cash. Equity and Law’s sharf ? ro * 
wasted no time in making their Britain. ’ Tt durable m “ clur ® r . ?]. pasterboard in price closed unchanged las^™®* 

first fomy into the growing Norgips wfll shortly have the “ ^ SS? «SS «SEe Ea , rope ho J5 In « moa °- at «9P* ? uu * e * 

European plasterboard market, capacity to manufacture up to over Biti^ market. Mr Pagezy said that if thui ne /fl 


Redland, the British building formed a joint venture to attack since 1975. Plasterboard i 
materials group, and GSR, the theEuropean plasterboard mar- of 450m square metres ini 
Australian building materials, ket, twill use Norgrips initially tern Europe axe forecast td 
sugar and resources group, have to import plasterboard into to 600m square metres by/ 
wasted no time in making their Britain. ' Tt . hrflL durable 

first foray into _ ^ the growing Norgips will shortly have the 
European plasterboard market, capacity to manufacture up to J® 

The British and Australian 50m square metres of plaster- arul b eat msuianon nt* 

poly over the B-itish market. 

Redland and CSR plans to takeover was successful 

plasterboard manufacteureri •• skies of plasterboard in Bri- mercial developments f® its *° £80m - The Jhit venture says formidable competitor in 
Redland and CSR, which only tain have risen by more than a acoustic and fire resist P™; « Jo £Ptore_ about 30 \ insurance markets of the Euro" 
last week announced they had fifth to 136m square metres perties make it J for per cent of theBritish market pean Community." a y nn 

AIC makes 190p per share 
offer few Wills Group 


Australian Investors Corpora- 
tion (AIC) yesterday issued a 
190p-per-share general offer for 
the Wills' Group, the flrianeial 
services and import company, 
alter raising its stake in the 
company to 2L8 per cent with 
a purchase of 1.1m shares-from 
Mr BL L. Marsh, the Wills chair- 
mam - AIC .^previously held a 
94 per cent stake. 

Mr John Hnckle, Wills 
finance director, said the share 
deal would, allow for a closer 
co-operation between Wills* 
Australian financial, services 
operation and Clayton Robard, 
the Australian financial services 
group which owns 314 per cent 
of AIC. AIC is a listed Aus- 
tralian investment company. 

Clayton Rqjbard -is a sub- 
sidiary of TymfeU Holdings, the 
UK financial services group: 

' “The potential: for fte de 
velopment of our Australian 
business is fantastic," raid Mr 

Mr Huckle said that growth 
of thet Australian financial ser- 
vices operation bad been 
limited because of Wills'- small 
size and that new opportunities 

for diversification would now 
be available. 

Wills shares shot up from 
186p to 213p yesterday follow - 1 
fag the announcement, and' Mr! 
Huckle was uncertain about 
the response to the offer. Mr 
Christopher Spence, chairman j 
of Tyndall Holdings, indicated 
the offer was in part- a form- 1 
ality, although AIC was happy 
to, acquire more shares. 

The general offer .was re- j 
quested by the Wills .board, 
after consultation with the 
Takeover Panel, and directors 
holding 2.7 per cent of the 
shares do not intend to take np 
tiie offer. Mr Huckle. said, how^ 
ever, that thp market for l the 
shares hast tended to be thin 
and that some shareholders 
. may. Tvi&b to- r ealise their ill-. 
: vertment- .•“>*" 1 ' yJ. 

Doe to health reasons, Mr 
Marsh will yield his position as 
chairman of the group to Mr 
Spence, and become non- 
executive deputy chairman. Mr 
Garnett - Harrison, Tyndall’s 
managing director, will become 
non-executive director of Wills. 

w; : l 

■ * i t >. ' 

■ • : \ 

... i'i. . 11111 ■m.i nun ii wjm.yuu uu-wmiji.— 

JF-f .MZ*r~i v/jj, WjUC * ** 
■ v .= 


Ts exe- 
d make 
in the 
d £2.1m 
st year, 

led that 
to de- 
> of its 
RCL a 

one Hik 

Sts of 
ver of 
over of 

ip lp at 
a daw- 

ad com- 
f dispos- 
t on dis- 
ly £20m, 
=d 5p to 



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Afeaco invests ......... .04 Nov 9 „■ 0.15 04 04 

APY Baker Jnt 8.-7 — 19 

William Baird int 4.95 Jan 6 - 446 — 1U 

Brown Boveri Kent int 14 Jan-4. 145 . — 84 

Clarke Nickells -Jut LI Nov 16 1.05” — 3.15* 

Corah -int 14 Nov 16 14 — ■ 4' 

Computer People 14 - - Oct SO — 

Desoutter Bros ..Jnt 2.7 Oct 28 24 — 7.7 

Garten Englxteertng int 145 Dec 1 1 ■— 4 

Guinness int 3 Nov 2 244 — {18.16 

Laporte Jnt 4.4 — 34 . 1045 

Handera (HMgs) 34 Nov 10 24 — 10 

Mottos -int 24 Nov 26 24 8.7 

Perry Gronp Jnt 2 — ■ 145 • 6 

Reekitt 8c Cohnan int 74 Jan 7 8.75 — 184 

RTZ int 8 Nov 9 7 — 234 

Sutherland .int t043 — L46 — 343 

Tor Invest ....1148 Nov 5 104 17.48 154 

Wolstenhatme: Sink int 4 Nov 12 2.75 — 9 . 

Westpool ......... 145 Nov IS 146' 1.7 14 

W Yorks Hospital t3 — 24 44 4 

Dividends shown pence per share net except where otherwise 
stated. * Equivalent after allowing for scrip issue, t On capital 
increased by rights and/or acquisition issues, t USM stock. 
§ Unquoted stock. V Third market- J] Apportioned to 12 mouths 
(from 15-month period). 

• A high rate of interest 

• Withdraw^ on demand 

• Quarterly gross interest 

• • No minimum balance required 

London under a Charity Commissioners Scheme. 
Gross Daily Deposit Rate 9J35% P&. 
(Compound annual rate 9.68%) 

14th September 1987 


I m 




T HE PAST YEAR has seen Dalgety concentrate 
slngls-mrodediy on growth opportunities in food. 
£71m has been raised from sales of 
businesses that do not fit the strategic plan, and 
£8 5m spent on acquiring new companies, principally 
In high value-added food products. 

Of these, Golden Wonder gives us a major 
stake in one of the fastest-growing sectors in the ILK. 
food market, crisps and snacks, and through the 
Dutch company a bridgehead into the European 
snackfoods market 

Overall, Golden Wonder has contributed more 
than £8m trading profit for its nine months in Dalgety 

r At the same tfr , progress has been very 
satisfactory within exist! ; businesses, large and small. 

| Spillers, for ins [ice, has exceeded 
expectations In the fast- panding petfoods market 
increasing the combined oiume sales- of two key 
strategic brands,.WIneloi vime and Kattomeat by 
over 25%. 

;!n all. Dalgetys >pd operations accounted 
for 47% Of turnover and ■ % of profit In 1987. 

They now range bm food Ingredients and 
food manufacture in Eura b and the United States, to 
fatt-food distribution in i rth and South America, 
though this Increasing foi s *on the housewife’ has 

not meant losing touch with West-standing 
business partner, the farmer! 

In agribusiness, tra|. s ,^ t | S up to 
£30.8m, compared to £27.Bn yoa i> 

Concluding his reviet e year, Chief 
Executive Terry Pryee commen • 

“We are fit and lean aiL to 
along our chosen route. The pits f 0r Dalgety 
ere very good."- \ 

For a full copy of our Rand Accounts, 
to be published next month, picUe to 
Shareholder Relations, Dalgety U Hanover 
Square, London, W1R 9DA. I 



- m A ■■ > v - 

















be * 




the i 







broi a 



the 5 

sec “ 






















to all 
to tht 



Financial Times Friday Septemier 18 1987 


inness ris«s to £151m at midway 


e International 
• anno unced pre- 

f £i5lm for the 

(87 compared with 
same period last 
isa Wood, 
il, the 

fliers, the Scotch 
any, and had ip 
Included for th e 

i the comparative 
have been £142 m. 

results were 
t city forecarts, 
Lged from £150m 

to £l80m. Howe\ some City 
analysts said thavj e forecasts 
had been over-he^ and fore, 
oasts for the fuyear were 
marked down acco*igiy. 

A net Interim di-, n{ j of g p 
will be paid, with Recast by 
Guinness board of t_2p final 
Earnings per sharhereased 


by 13 per ceirt fmcTgp for 

the first half of 198t n^p. 
Net debt as a P«re*ige of 
total equity fell fro^i pe r 
cent at December 31 Ufo 64 
per cent at June 30. 

Mr Anthony Tennant, 
Guinness’ chief executive, said 
that he would have liked to 
have seen greater progress in 
profit performance but the 
group had yet to realise its full 

Turnover for the half year 
was £L3bn (£lbn). If the 
Distillers company were in- 
cluded far the whole period, 
the spirits profit at £145m 
(£l32m) showed an increase of 
10 per cent over the compare 
able period in 1986. Margins 

were beginning to improve, 
Guinness, largely through 
production-cost rationalisation. 

Brewing profit fell from 
£36m to £29m, benefiting from 
low product advertising in a 
period of high corporate spend. 
This year has also seen in* 
creased worldwide spend on 
brand marketing. Total global 
volumes were largely un- 

Guinness* share price closed 
at 367p down 8p on the day. 

See Lex 

Lod on the motives behii Guinness’ £293m deal with Schenley 

airing up the rejs in the US market 

SSSSS Sssrte»:. 

““.forth. sta Squidtion It Schenley. I 
ig“^f s 5th largest prinks company 

ne 30 it Struck a sum b Gu 

distributes Guh 
icluding Gordon' 

•s White Labe * 

] deal to New the US, whi 
Schenley Indus- ness branfc 
r US disttibutor, SSsto d JveslGuinnes a more 

SS^merSi m toe d^rihu- 
financial results, tion and 
or roup for Mr brands m a keimarket. 

- « sgfffeaTjS 

S£3££ SKKSKg 

SSt vear — given in the year entng January 31 

In' the US C inness already 
owns Somerset! another site- 
able distribu on company 
which in June ormed a Joint 
r Tennant. . venture with Sdefflim a sub- 
f formerly chair- sidiary of Freth cognac and 

hationsd Distillers champagne dii -ibutor Moet- 
tone of the world’s Hennessy . Gaxa » Jmiids 

took over Distil- 
or Scotch whisky 
■April 1986-the 

Sdently points up 

being hammer 
£ Tennant. 

l*wine Mid spirits tribute d by th new venture 
nc in his brief include Johnni 

Walker Red 

Ke^setl SHUTlM whisky 

Epment at a bus- Schenley a* Schiefflm- 


&L\y Tennant, chief 
cutive of Guinness 

Hc^iton Canadian whisky. 
Mr Tant said a number of 

ject of the Department 
Trade Inquiry. 

The acquisition of Schenley 
thus achieves a dual purpose 
without an apparent payment 
by Guinness of a premium for 
the Dewar's trademark. City 
analysts had forecast that a 
purchase of Schenley could 
cost Guinness up to £500m. 
Guinness sand very carefully in 
its statement on the acquisition 
that it was advised by Morgan 
Stanley “who have confirmed 
that the transaction is fair to 
the stockholders of Guinness 
from a financial point of view.” 

Mr Tennant said: “ Other 
parties were _ interested in 
acquiring Schenley at prices 
beyond what we would have 
paid but the dispute was a bar 
to them." Any sale to a com- 
petitor of Guinness could have 
had very adverse effects on 
Guinness’s distribution in the 

Mr ROclis still owns some 30m 

said a number of a fa rt that has not 

and 0 ®?® ^ eing , exa ? u S2? assisted tiie recovery of Guin- 
fcd not rule out pos- t^s share price, 
stole ^ of brands. — - - - - - - - 

b Saunders. Mr If e ly. Mr Tennft said: It is am ‘big back. For the deal profits from the first full year, 
t former chief sensible to had two separate wrangle between Nevertheless there are still 

f dianissed after celling operatids because of ^uinnei n d Mr RiklJs oyer several obstacles to be overcome 
lot a Department number of fends involved. J&e of the Dewar’s Although the Schenley aequi- 

ISrv into alleeed ^ e e Scture vTenable sales- Mana. the US. Dewar's, ^on was well received in the 
KTcuirmess dur- ™n to focus> a logically Jnedgnad to DMDm city there still remains a deep 
ler of Distillers, assembled portho.” „ }■ J Scotch brand m scepticism over Guinness 

C . . Tpi> as to whethefichenley itself the US. Analysts are also wary 

? ank .°f ?eento ceSd become halved in a Mr Rifajought more than putting the stock back on a 
BF enterprise rfth another five per «jf Guinness shares premium rating. One said; 

drinks companj A 0 _ ftlrtlier ^rejte^^er 0 f Distmere. -some lnvMtors do nrt -ish 

to get involved until Hr Tennant 
hag delivered the goods.** Never- 

.£T ,-f.tpn. ind of the ratio«sanon oi roe ijaoei wnuusy theless, there is some feeling 

fc U ^QrioriS ^f business in theJS. There is were subse nt iy transferred that to Temumt; who has a lass 
still a coming i ether of units Mm. giossy way of approadiing the 

FrfXSSautiag in the drinks ^ sudi a large City than hfe predecessor, is 

finSSS Guinness /fount Distillere’ ai provoked con- fulfilling his strategic 

ent and nMnciai gg P cent of Schen- siderable difcf in the City Mr Tennant enjoys uv u>u- 

Ss TSm and the and formed i of the daman- dons: “The strategy we have 

?hi«h are spirits ley s mj bnne several ine disci osuiWpr Guinness’ embarked unon has been well 

Tt«v S* brands : ^ The schenley acquisition will f k® a ^? ue ^.“ y PH? net cause any dilution in Guin- 

nmneni Rucm,, -r Schietnm- v be arguea oy criucs ^ ^ dilution in Guin- 

fd been fashioned somerset will^ run sepap that <ness has bought its ness earnings and will enhance 
id beenrosu i> 0 “ ei3 Mr Tenn r t « lt }s own tag back. For the deal profi1s the first full year. 

lev's sales uic «u.u. iuumu * oi me aama*- -loiis: me aim— _ 

Rcauisltion w bring several tag disclosur^r Guinness' embarked upon has been well 
. etratpev new brands including Old handling of be Distillers received. But it 

Of tllB illdlCSy M fUrbOn ai mn iPtH A« u 4 Jj.. ■■L 1 1 -A TITa kuna of 11 

^ain more control Charter 

— w — - is early days 

and acquisition wt are the sub- yet We have still to perform. 


Partiership pic 

Departrsnt stores and 

ConsolicMd unaudited results 
for the hoear ended 1 August 1987 



1986. % change 


Sales rncraWI) 

Trading Pr 



7123 +12 

452 +17 


Pensioned Contribution 



12 +48 

62 +13 

Surplus for preference 

dividendofit sharing and, 
subject ' ration, for retentions 



Sales Pro® 

Sales vancouragingly ahead of the original estimates and of nationa-etai 
comps*s in both the department store (+13%) and Waitrose (+ 11 %) distorts, with a 
useful tjutton from new branches. Half year profit before tax increasdby 17% 
and, am. Is double the level off three years ago. 


AHoc&etween retentions and profitsharing Is determined when ttwesutts tor the 
fuHy(3 known. Preference dividends forthe half year were S£109,00((£t19, 000). 

Fortrdetaflsofthe results and/or the John Lewis Partnership pleas telephone 
01-(434 Ext 6221. 



likely this 

By Cfey Harris 

Sotheby's Holdings, privately- 
owned parent of the London- 
based auction house, ma y 
■pmiw a public share off ering 
this autumn. The US com- 
pany disclosed the possibility 
in a filing with the Securities 
and Exchange Commission; in 
connection with a planned 
share option scheme for 

'"siKSrt *»id **£**«£ 

that under any flotation, to 
Alfred Taubman— who Iro 
die takeover of Sotheby’s ™ 
1983 and owns 60 per cent or 
the company— would retain 
voting control- 

Hie share option scheme 
would apply to more than 300 
staff members worldwide, to 
Michael Amalie, president, 
said it was intended to reward 
employees for their perform- 
ance and encourage them to 
remain at Sotheby's over the 
long-term. , 

A public offer could also 
relieve pressure from some of 
Mr Tanbman’s minority part- 
ners who have yet to realise 
any return on their invest- 

RTZ beats expectations 
as earnings rise 21% 


Rio Tinto-Zinc, mining, energy 

and industrial group, yesterday 
exceeded marltet exp^tatKms 
when it repor te d 
attributable profits of 
a 21 per cent advance on the 

fasjjm of 1986. , , 

The industrial sector, helped 
in particular by 
minerals in the US, increased 
p^ming s by 30 per ce^t to 
flOlm bnt energy was state at 
fift m and metals earnings 
dedtaed. £2m to £37m. _ 

Sir Alistair Frame, churawm, 
said that the full effect or 
recent metal price rises still had 

t °ta C adStion the second talf 
would benefit from moreasett 
iron ore shipment by 
Hamersley, a subsidiary, of 
BTZTs associate company cka. 
Hamersley had lost nmrket 
share in the first half and this 
was the main reason for roe 
decline in metal profits. 

A programme of LflOO redun- 
dancies had been put in team 
at Hamersley. Market stare, 
which had been lost to South 
Africans, was being regameo. 
Sir Alistair said the 

Share sales in 

By KQdd Talt 

Despite the silence from 
Hotmtieigh, the aggressive 
property company headed oy 
Mr Tony Clegg, over the 
Storehouse situation* a num- 
ber of Institutional investors 
are cutting their stakes in the 
retail group. 

Yesterday, Baring Invest- 
ment Manag ement, Schroders 
Investment Management and 
Scottish Widows, all disclosed 
ywiaii share sales— reducing 
their holdings to 9.95 per 
cent, 3 per cent and 3-76 per 
cent respectively. 

Mountleigh announced 
♦lint it was considering a bid 
for Storehouse, the large 
retailing cbam beaded b y Sir 
Terence Conran, in August. 
Since then, there have -been 
no further developments and 
Storehouse shares dropped 
sharply on Tuesday, to 
Clegg, however. Indicated 
earlier this week that nothing 
was yet derided and he 
expected an announcement in 
the next week to 10 days. 

B&C own share biiy 

The p ur c has e by British & 
Commonwealth H oldin gs of 
90m of its shares from Cale- 
donia Investments - was 
approved by ordinary share- 
holders of both companies 

The separate meeting of 
B&C convertible loan stock 
holders was adjourned until 
October 2 because of the tack 
of s quorum. B&C said the 
expected effective date of 
October 15 was not affected 
by the delay. 


Fergamon Holdings, Hr 
Robert Haxweirs master com- 
pany, has Increased its stake 
In Henry Ansbacher, the 
merchant bank, fkom Just 
under 5 per cent to 9-17 per 


Mr Maxwell is a major 
client of Ansbacher which 
said It welcomed Us increased 

B. Matthews 


is published on 
Wednesday & 

For details of 
advertising rates , 

Deirdre Venables 

financial Times 
Bracken House 
10 Cannon Street 
London EC4P 4BV 
Tel: 01-248 8000 

Ext 3231 

chMntmTs and PQlar companies 
were continuing to acquire 
attractive businesses. Substan- 
tial investment was being made 
in North America in low- 
emisrtvity coated glass. 

The industrial sector's 
advance means that it 
tributed 65 percenter* the 
giu U p’s attributable profits, up 
from 57 per cent last year. 
Metals provided 24 per cent, a 
five percentage point decline, 
and energy U per cent (14 per 

RTZ*s industrial int erests 
progressed in all major activi- 
ties. Among the highlights was 
RTZ Borax, which substantially 
increased exports and showed 
earnings growth of 30 per cent. 
wro Cement performed “ satis- 
factorily" In the UK with inr; 
creased volumes and cost 
reductions compensating for 
discounting following the 
abandonment of the prices 

LA M-*- 

In metals, aluminium earn- 
ings grew on the strength of 
higher prices but Palabora 
copper revenue was reduced by 

the rand and Hamersley's earn- 

ln gSy^raoii.»dGa s 

production dedtaed asdid that 
St LASMO. Profits from Ans- 
tralian coal exports fell- 
For the six months to June 30 
RTZ Group eamto^per shffle 
were S&23P' (30.07p). The 
interim dividend was lifted 
from 7p to 8p. ' 

Group pre-tax profits of 
£254.5ni (£229 Am) were 

achieved on turnover of 
£2.17bn (£2.03bn) of which 

the related companies' snare, 
was £422.4m (£513jta). 

The net attributable profit 
was reached after tax of 
fnoim ffll 0.5m) and profits 
attributable to outside share- 
holders of £2&9m <£2fl.lm>. 

RTZ is planning a Share- split 
and consolidation resulting in 
the issue of five ordinary or 
acffli m uT a ti T i ff ordinary shares 
of lOp in place of every two 
shares of 2fip each. 

- Currencies during ihe period 
had a broadly neutral affect 
The debt equity ratio unproved 
from 36 per rent to S3 per cent 
See Lex 

f K ad 

Perry 42% ahead to £2.6m 

Perry Group, Ford pate 
dealer, lifted pre-tax profits 42 
per cent from £L.79m to £ 2 .55m 
mthe first half of 1987, on turn- 
over 23 per cent ahead at 
fgs go rn, against £80.O9m. 

The company said that since 
then, July had shown an im- 
provement on 1986 and August 
had been a record month. While 
it should not be assumed the 
interim percentage increase 
would be reflected in the full 
year’s results, an acceptable 
outturn was confidently pre- 
dicted. . 

Negotiations were well in 
hand in respect of further 
acquisitions to enable the 
company to achieve its longer 
term growth objectives. 

After tax of £960,000 
(£703,000) earnings per 5p 

share grew from 5-flp to 8.7p. 
The interim dividend has been 
stepped up from 1.65p to 2p— 
last year’s total payment was 
5p on £4.7m pre-tax profits. 

At the operating level, profits 
rose £470,000 to ^2-Slm. before 
interest payments of £265,000 

The figures included finance 
Charges of £237,000 (£241,000) 
under leases, in compliance 
with SSAP 21. 

• comment 

Perrys Ford dealerships, 
according to chairman Richard 
Allan, are now mature. In other 
words, they’ve peaked. To keep 
tiie growth ' snowball going. 
Perry has got to go for acqui- 
sitions, and a deal which would 

add tour Austin Rover dealer- 
ships, one Jaguar and one Land 
Rover to the group is close to 
completion. Peugeot and Mer- 
cedes dealerships are also tar- 
geted, as well as more Volvo 
outlets. On the used motors 
side, profits are up 64 per-cent 
Estate agents, however, have 

disappointed. New m ana ge me nt 

has-been appointed and a 

decision on whether to expand 
or sell will probably be taken - . .. 

by year end. With a caution * 
from Richard Allan that yester- 
day’s 42 per cent pre-tax profits 

increase should not be assumed 
for the fuU year, shares closed , ? 

5p up at 313p. Assuming pre- jjiMtJlirHII 
tax profits for the year of £6m, - 

that puts them on a reasonably 
valued prospective p/e of just 
under 15. 

sjjfr red 


Independent, the Ivory and 
Sime managed investment trust, 
is to change its investment 
policy from that of a technology 
specialist to a more flexible 
policy of venture capital and 
suitable liked investments, 
without restrietkm as to indus- 
trial... sector. of geographical 

Atlantic Assets, ta which 
Independent owns' 60 per cent 
of the equity shares, stated 
yesterday that it would not be 
liable for tax on the gain of 
£18. 4m which arose when it 
made a forward sale in 1985. 

Shareholders told at the a nnual 
general meeting that first- 
quarter results were on plan 
and well ahead of last year. 
This encouraging trend had 
continued. Margins have con- 
tinued to improve and results 
were still substantially ahead 
of last year. 


The financial Times proposes to publish 
this survey: on 

Wednesday, October 21, 1987 

For g pU editartal sgnppais cmd detaUs of 

on 01-236 1434 

or write to him at i 
Bracken House, 10 Cannon Street 
London EC4P 4BY 
Telex; 8954871 



.'v-c r '■? >;- 

On Tuesday, shares ta 
Bernard Matthews fell 18p 
to 132pf not to lS5p as 
reported in the comment In 
Wednesday's FT. At 132p, 
the shares were on a prospec- 
tive p/e of approximately 17*. 
assuming the company dupli- 
cates Its 1986 profits tn the 
current year. 





Syndicated Revolving and Term Loan Facility 

Arranged and Managed by 


Funds Provided by 

Rank of Scotland 

ANZ BankmgGroup Limited 

Barclays de Zoete Wedd limited 

The Hongkong and! 

Banking ( 

Barclays Bank PLC 
Bank of Ireland 
Credit Lyonnais 
Postipankki (U.K.) 



September 1987 

: ' * v 





. /Finmcidl'*tbDes Friday Septtinber'lS 1987 


Wm Baird to £8m midterm 

A 28 per cent increase in 
profit was achieved by William 
Baird, the textile and engineer- 
ing group, in the first half of 

Turnover and operating profit 
expanded. An added boost 
came from a substantial reduc- 
tion in Interest Charges, so 
giving a pre-tan profit of 
£7 .97m (£S.2m). 

Group sales totalled 1121,47m 
(£111.18m); on the profit side 
Baird Textiles improved from 
£5.4m to £5. 87m and Darchem 
from £2.03 m to £2£5m Invest- 
ment income fell to £218,000 


Central administration costs 
absorbed £276,000 (£205,000) 
and interest charges were 
£786,000 (£1.24m). 

Earnings per £1 share worked 
through at 13.7p (I0.7p) and 
the interim dividend is raised 
to 4J9Sp C4.26p) after adjusting 
for a scrip issue. For the year 

1986 the group made a profit 
of £18.65m and paid a dividend 
of U.lp. 

The directors stated that the 
group was continuing to benefit 
from its balanced portfolio of 
interests in textiles and 

Additional capita! investment 
was . generating further im- 
provements in efficiency and 
resources were available to 
continue the organic growth of 
the core activities and to 
expand by appropriate acqui- 

• comment 

William Baird yesterday laid 
to rest any lingering doubts 
the City may have hid about 
the company’s ability to with- 
stand the winding down of its 
lucrative nuclear business. The 
45 per cent rise in operating 
profits contributed by its engin- 
eering arm Darchem was bet- 

ter than most expected and . a 
dear sign that diversification— 
into auto tooling equipment 
and the aero engine industry— 
is working. Just two years ago 
nuclear business represented 43 
per cent of Darcnem's sales, 
it’s now down to 22 per cent 
and predicted to fall to 12 per 
cent by 1989. Baird Textiles 
produced the good, solid per- 
formance that has come to be 
expected of it. with Dunimac 
doing particularly well. The 
company is keen fo rrnore acqui- 
sitions on both sides, but, 
eschewing contested bids, will 
continue looking for not-tbat- 
expenstve companies that fit in 
with its existing businesses and 
have good earnings. Shares 
closed 15p up yesterday at 528p. 
Assuming pre-tax profits for the 
year of £23m, that puts them on 
a prospective p/e of about 13. 
not expensive for a company 
with this performance. 

BBK advances past £5m 

ACTIONS TAKEN in the latter 
part of 1986 to ensure profit- 
ability in tiie sector of systems 
and site services businesses, 
enabled Brown. Boveri Kent 
(Holdings) to pre-tax profits 
by 19 per cent fo /5.12m for 
the half year to June 28, 1987. 
Turnover rose by only 2 per 
cent to £64J5m. 

Mr Erwin Bielinski, the chair- 
man, said that competition in 
the company’s markets had 
(remained Intense, particularly 
from US based companies 
benefiting from the weaker 

The company’s interests are 
in the development, manufac- 
ture and ■ marketing of high- 
technology . equipment and 
systems for industrial process 
control, measurement and 
liquid metering. 

The chairman said that man- 
ning levels .had fallen in a 
number of areas, and overheads 
bad remained, under very tight 
control. New products intro- 
duced earlier in the year, 
notably in the area of flow 
metering and control systems, 
were well received. Overall, the 
board was confident of an 
improved financial perform- 
ance for the full year. 

In these circumstances, the 
interim dividend has been, 
lifted from L25p to 1.5p. Last 
year’s total was 3Ap on £9A4m 

Net interest charges for the 
half year were lower at £744,000 
(£1.33m). After tax of £lA6m 
(£L32m) and minorities, net 
profits were up from £2J92m to 
£3. 39m. Stated earnings per 25p 
share were 4J5p (4-4p). 

The chairman reported yes- 

terday that BBK was in negotia- 
tion with Bopp and Reuther of 
Mannheim. Germany, which if 
successful, would result in co- 
operation in the area of water 

Last month, BEK’S ultimate 
holding company, BBC Brown 
Boveri of Switzerland and ASEA 
AB. of Sweden announced an 
agreement to merge their opera- 
tions. Subject to the merger 
being approved, a new operat- 
ing company named ASEA 
Brown Boveri will be formed 
by January 1, 1988 and will 
take over as the major share- 
holder of Brown Boveri Kent 
holding 54.5 per eent of the 

This development is seen as 
an important step in strength- 
ening tiie group by way of 
access to new markets and in- 
creased business. 

Wolstenholme profits up 
despite reduced margins 

Wolstenholme Sink, the 
Lancashire-based manufacturer 
of printing materials, .increased 
pre-tax profits by 16 per cent 
from £L16m to £L34m oh turn- 
over up from £14jl2m to 
£15B4m in the first half of 

The directors said yesterday 
that trading across foe group 

W. Yorks Hospital 

Further growth was ,achieved 
bs West Yorkshire Independent 
Hospital ' fin the yfcar ‘ ended 
Jtme 30 1987. 

The USM quoted operator of 
a 49 bed hospital lifted .its turn- 
over 17 per cent v to £L2m 
(£2J75m) and its pre-tax profit 
by 16 per cent to £709,000 
(£622,000). ’ - 

Earnings moved up to 10A8p 
(9.42p) and the final dividend 
is Sp for a total of. 4.5p (4p). 
There was an extraordinary 
charge of £104)00 (£1374)00). 
had been up. to expected levels 
although two factors bad 
limited growth in profitability. 

First foe -strength of foe 
pound had reduced profit mar- 
gins ip export markets. Second, 
wolstenholme Bronze Powders 
made foe decision to manufac- 
ture its own offset gold inks. 
Ibis' had meant the loss of a 
major UK customer for bronze 

While profits would 'he 
affected in foe short term, in 
thg, -medium form foe sales of 
foe company's own offset gold 
inks would prove profitable '■ 

Tax' ' canto ' to £4094)00 
f£3S4.960>,> rand - ■mfiaorttieB 
£32,000 (£35,000). There was an 
ex tr aordinary profit (less tax) Of 
£50,000 from foe sale of a sub- 
si diary business, compared with 
£913,000 in 1988 from the sale 
of land at Bolton. This left 
attributable- profit at £9474)00 

Earnings per 25p share rose 
to 14.8p (12p). 

The interim dividend was in- 
creased to 4p (2.75p) to correct 
the imbalance between the into 
rim and final dividends- (last 
year's total was 9p)- • 

John Carr 
joins board 
of Cowan 

tty Philip. Coggan _ . . 

Mr John Carr, foe mao who 
built Windsor Securities into a 
major insurance broking group, 
is joining Cowan de Groat as 
chief executive. A consortium 
of investors led by Mr Carr and 
foe Water Authorities Superan- 
nuation Fund is buying a 6 per 
cent stake. 

Ifr Carr'was-.hrp ag bt into the 
group by Mr Philip Birch, the 
ehairmm .and dhief .executive 
of- Ward White, who bought 
into the toy imp o rter early last 
year. .Since then, the group 
has diversified rapidly -by buy- 
ing an accountancy tuition com: 
pany, a computer training 
company and a MY wholesaler. 

Mr Derrick Cowan, chairman, 
said that the appointment of Mr 
Carr meant that the' group 
would continue its acquisition 
programme. “We believe in 
diversification." he said, “we*re 
a zoo, not a'fann.” 1 

r The shares climbed 15p to 
98p yesterday. 

Corah loss 
after stock 

The hope that 1987 would 
be a year of continued 
recovery for Corah, manufac- 
turer and distributor of 
knitted clothing and fabrics, 
was shattered by yesterday’s 
Interim announcement. Pre- 
tax profits In the six months 
to July 3 have plunged from 
£906,000 to £132,000 and 
taking an exceptional item 
Into account there Is a loss 
of £L57m. 

The exceptional item of 
£1.76m arises from the 
directors’ decision to reassess 
the realisable value of surplus 
stocks which will be dis- 
posed of more rapidly, 
thereby Improving cash flow 
and reducing borrowings 
which stood as high as 75 per 
cent of shareholders funds at 
the end of 1986. 

Mr Nicholas Corah, foe 
executive chairman, said that 
following the re-structuring 
of foe group, which included 
management changes, manage- 
ment critically reviewed all 
overhead costs and identified 
substantial savings. There will 
he benefits this year but the 
major contribution to profit 
will accrue in 1988 and there- 

Reviewing the past six 
months, Mr Corah said while 
the year started with 
optimism, with encouraging 
ides in January and Febru- 
ary, certain factors have had 
a major effect on foe interim 
results. The decision to 
reduce work In progress by 
cutting hack production In 
order to conserve cash had an 
adverse effect on the recovery 
of manufacturing overheads. 
Ibis was compounded by 
most disappointing sales in 
Hay. and June ' 

The H. B. Howard subsidi- 
ary made a loss of £4254)90 
in the' first half of 1987. 
There followed a strike at foe 
Ashton factory in June which 
cost the company £275,009 in 
lost production and severance 
payments, of which £75,000 
has been charged' against the 
first half. The strike was 
subsequently settled In 
August and steps are under 
way to ensure that Howard 
achieves profitability early In 

Based mi a strong order 
book and with the expecta- 
tion of reasonable sales 
through to Christmas, the 
chairman said foe . board anti- 
cipates a signifi cant recovery 
in profit in the second half 
of the year. Pretax prefits 
for foe whole of 1986 were 
£&29m. - «. 

Turnover in the. period was 
£46£3m (£45J9m) and the 
cost o t sales,- . £3 9.79m 
(£37Jt5m). The operating 
profit' was £L24m (£2. lot) 
after deducting distribution 
and selling costs of £2A7m 
(£2 Am) and administrative 
expenses of £2.74m (£2A4m). 
Interest payable was £L05m 
<£L2m) and tax . took 
£208,000 (£3174)00) leaving 
a. loss per 2Sp share of 5J2p 
per share fL7p earnings). 

The board stated that its 
confidence in the future Is 
reflected in the decision to 
maintain the interim dividend 
at lBp. 


GOAL PETROLEUM sharehold- 
ers took np 35.87m (about 97 A 
per cent) of foe 36.|68m shares 
on offer. The balance has been 
sold at 97.75p net per share. 
Following foe rights Norwich 
Union Life is interested in 
32J>m shares. (29.5 per cent) 
and foe Prudential Group re- 
mains Interested in 6.62m (6 
per cent). -. 

KEWHX SYSTEMS ' has traded 
strongly in -foe early months 
of the financial year, compared 
with last year, the chairman 
told foe annual meeting. Turn- 
over for foe five months to 
August 31 was up by about 30 
per cent. A return to profit for 

foe first six months at FSC was 
foreseen and that company 
should trade even for rest a£ 
year. - 

conditionally agreed terms fin- 
foe acquisition of 80 per cent 
of Wlnsdale. ; This company 
began -trading in January 1988 
as consultants to the defence 
Industry and' is planning to 
enter Into commercial activities 
relating to defence technology 

TI " GROUP: said s h arehol d ers 
had put in valid applications 
for 24429m shares, some 91 per- 
cent of foe 26.78m total on 

offer. The remainder were sub- 
ject fo foe placing. Completion 
of foe acquisition of Houdallte 
was expected next week. 

STODDARD (Holdings) has con- 
tinued the trend of foe' first 
quarter results which were on 
-target and well ahead of last 
year, the chairman told foe 
annual -meeting. Margins had 
continued to improve and re- 
sults v/exe still substantially 

qli pad. . 

acquired foe business and free- 
hold property of Precision 
Moulded Plastics (Dorset) for 
up to £y.5m. PMP, which makes 

and supplies a range of plastic 
encapsulated filters and 
strainers, forecast sales and pre- 
tax profits of £lm and £250,000 
respectively for 1987. 



Interim!— Brood on. Dlnkla Hut 
Mac* I la n -G Ion I ivot, Wm Morriaon 
SupannsrkMa. Boom* Ol Ivor (Foot- 
wear). Mattgnum. S&la Til nay. 

Interim*: — Broad on. Dlnkla Heel, 

Rnat*:-~ Broadcast Communications. 
Northern Industrial Improvement 
Trust. Star Computer. To io matrix. 
Zambia Copper Investments. 

Twenty Americans in Amsterdam? 

■PBugost 24th, the 
ESjEuropom Options 

Exchange fawnptwil an 
option on the US. Stock- 
.fofeOMLTlw first OS. 
index to becraded outside 

This index. Major 
Market Index, is com- 
posed out of the stocks of 
-twenty US. bine chips 
sudaasIBM, AT&T, 
General Motors eit The 
index has proved (0 be an 
extnandy good reflection 
of the general perform- 
ande of the US: maite. 
Since 1983 XMI-optkms 
a r c succ es fi iUy traded on 
the American Stock 
Exchange (AMEX) in 
New York with an average 
daily turnover of 754)00 

contracts. . 

The XMI contract 
traded on foe E0E is 
fungible with foe contract 
traded on the' AMEX. In 

total i market of more v 
than ten hours is cr ea t ed , 

On the EOE, European 
at 12.00 pjn. in Amster- investors are now able to 
dam and dosing in New trade directly in an option 
ybifc ar 10.15 pjn. accurately reflecting the 

Amsterdam time. US. market. 

Never wait Wall Street so near at hand. 


| please rend me further nfonaadoo about XMlKjpdoos. j 

I **■"■* : r " l/n t 

| AAIwbs. | 

I Ofo 

Postal code:. 


I EOE RR. dept, EOJex 19164, 1QOOGD Amsterdam, , 
| The Netherlands, THex H50UHe£« (20) 236659 1 

I .—Oil 

APV Baker up 50% and 
merger benefits to come 

! GOOD PROGRESS continued to 
be made by APV Baker in foe 
first half of 1987, with group 
turnover showing a rise of 58 
per cent and the pre-tax profit 
an increase of 50 per cent. 

And prospects were en- 
couraging, foe directors said. 
There were record orders on 
hand and good order prospects 
in the main business segments, 
and they described the outlook 
for foe second half and foe 
carry forward into next year as 

The group is engaged in foe 
manufacture of specialised pro- 
cess plant principally for the 
Jood and beverage industries, 
machinery for the printing in- 
dustry, and chemical and 
polymer processing equipment. 

In the half year its sales 
reached £297.Gm (£195m). trad- 
ing profit was £18m f£11.7m) 
and the pre-tax balance £16£m 
(£10fim). Earnings were 22. Ip 
(20 j9p) and the interim 
dividend is 8p (7p). 

Sales and trading profits in 
foe former APV companies 

were on a satisfactory trend 
with a positive contribution 
from tbe acquisitions of late 
1986 and early 1987. 

The trend of profitability in 
the former Baker Perkins 
group improved since foe bad 
results in tbe third quarter of 
198837, and that should con- 
tinue as the restructuring took 
affect. Potential benefits of tbe 
merger had been widely recog- 
nised; restructuring was pro- 
ceeding to plan and could be 
expected to result in substan- 
tially improved performance 
next year. 

Referring to the recent 
acquisition. Pasilac - Danish 
Turnkey Dairies, the directors 
said its markets and geogra- 
phical spread were comple- 
mentary to those of the 
company. Substantial benefits 
would come in 1988 and on- 

Since the beginning of 1936 
the company's share price had 
more than trebled — yesterday 
it closed at 834p, up 33p — and 
foe directors are recommending 

that the 50p shares be sub- 
divided into 10p shares. 

• comment 

These figures were ahead of 
market forecasts but even so a 
36p leap to 832p seemed a bit 
of an over-reaction. Analysts 
are puzzling over their full year 
forecasts and who can blame 
them; bard information was dis- 
tinctly sparse. There is no split 
between foe old APV and foe 
new Baker; there is no break- 
dow nof rationalisation costs or 
foe potential offset from pro- 
perty sales: orders are higher 
but it is difficult for the com- 
pany to say by how mueb. 
Rather like a football supporter 
who arrives too late for the 
game, one can only gain a vague 
impression of what is going on 
by listening to the roar of the 
crown inside. So far, foe ra- 
tionalisation appears to be 
going well and foe management 
inspires confidence but foe 
shares have had a good run and 
assuming £43m this year foe p/e 
of 15 seems well up with events. 


oves up to £2.5m 

Manders (Holdings), foe paints, 
printing inks and property 
group, raised pre-tax profits by 
8 per cent from £2.28m to 
£2.47m for foe first half of 
1987. Turnover was 11 per cent 
higher at £29.37 m. 

The improvement reflected an 
increase on foe UK paint and 
printing inks side, where pro- 

fits rose from £1.16m to £1.41m. 
Overseas printing inks turned 
in a lower £213,000 (£285,000) 
while property profits slipped 
marginally to £l-25m (£L27m). 

However, in foe second half, 
decorative paint sales have 
started slowly and profitability 
was being affected by increases 
in raw material costs and keen 
price competition. 

First-half tax charge was 
£890,000 (£860.000) and stated 
earnings per 25p share came 
to 10.4p (BJp). The interim 
dividend is increased to 3.2p 

The company said that re- 
furbishment of foe Mander 
centre at a cost of £4 m, was on 
schedule for completion prior 
to Christmas, 1987. 

Computer People doubled 
to Elm in first half 

TAXABLE profits of Computer 
People Group, supplier com- 
puter staff to organisations and 
businesses which came to foe 
market in May, doubled from 
£519,000 to £1.03m in the half- 
year to June 30 on turnover 
which increased from £13 .21m 
to £17.2m. 

Mr Michael Bayfield, chair- 
man, said foe level of increase 
was helped by a quicker-th ab- 
normal recovery from the tradi- 
tional seasonal reduction In 
consultants on assignment in 
the early part of foe year. This 
development will lead to a 

more even profit performance 
over foe current year. 

Both the UK and US per- 
formed well, with further 
increases in the number of 
consultants on assignments. 
Operating profit in the first 
six months was up from 
£736,000 to £U.7m; interest 
took £139,000. against £2284X10. 
and tax amounted to £414,000 
(£2014)00), leaving earnings 
per 5p share to emerge at 
6J5p <S.3p). 

As forecast the interim divi- 
dend is L2p. 

Sutherland just 
ahead midway 

Sutherland Holdings, formerly 
ET Sutherland and Son lifted 
pre-tax profits by £5,000 to 
£165,000 in the six months to 
June 27 1987. 

Turnover for the company, 
which makes, processes and 
distributes food products, ad- 
vanced by 73 per cent to 
£18£8m (£L091m). The interim 
dividend is a lower 0.3p 

Operating profits fell from 
£213.000 to £197,000 and 
interest payments totalled 
£32.000 (£53.000). After tax of 
£58,000 (£60,000) earnings 

came out at 0.52p (o.67p) * 

CHI buys 
for £30m 
via placing 

By David Waller 

CH Industrials, foe holding 
company with interests rang- 
ing from building chemicals 
to car sunroofs, is to buy 
Gripperrods International, a 
leading manufacturer of 
carpet grippers and flooring 
accessories, for £30-3m to be 
raised via a vendor placing. 

CHI plans to raise a fur* 
foer £8 -3m, £2.1m of which 
will be used to buy DMI 
Holdings, a produwr of com- 
ponents used in office furni- 
ture, and foe balance spent 
on a number of smaller, as 
yet unspecified acquisitions. 

In total, CHI's equity will 
expand by two thirds, creat- 
ing a group with a market 
capitalisation of approxi- 
mately £100m. 

The acquisition of Gripper- 
rods. a subsidiary of British 
Land , adds a fifth division to 
CHI’s existing activities in 
chemical and polymer pro- 
ducts. specialist engineering, 

Gripperrods is UK market 
leader in foe supply of metal 
and wood fixing strips for 
fitted carpets. It also makes 
related products such as 
underlay and adhesives, com- 
plementing the specialist 
flooring chemicals and ren- 
derings sold already bv 
Cemenione Beaver, a CHI 

Mr Tim Hearly, CGI's exe- 
cutive chairman predicted 
that Gripperrods would make 
pre-tax profits of £2m in the 
second half of the current 
year, against a restated £2.1m 
made tbe whole of last year, 
on £18.9m turnover. 

Mr Heart ey maintained that 
Gripperrods had yet to de- 
rive foe full benefits of its 
£4A5m acquisition of RCI, a 
major competitor, in June this 

CHI has grown rapidly, 
from pre-tax profits of 
£400.000 on turnover of 
£l&2m in 1982-83 to £3.59m 
in 1986-87 on turnover of 
£55Jhn. I 

Its shares closed up lp at 
186p. There wiQ be a daw- 
back facility for existing 
shareholders at the placing 
price of 167p. 

With the sale of Gripper- 
rods — - British Land com- 
pletes the process of dispos- 
ing of its industrial interests. 
It will make a profit on dis- 
posal of approximately £20m, 
and its shares added 5p to 
242 p. 


RTZ*s industrial sector highlights 
strong interim performance 

Contributions of the business sectors to the net attributable profit; before deduction of exploration costs, 
taxes on dividends and other corporate costs (£44 million), were: 




The industrial sector's earnings again moved ahead strongly with a 3096 increase on last year. The results 
fromthe speciality minerals businesses tythe US were particularlygood.RTZ’s other industrial activities also continued to 
perform well 

The metals sector's earnings were slightly down overall Although US dollar prices of most metals 
improved, largely towards the end of the period, the benefit from this was outweighed by a significant decline in iron 
ore revenue. 

The- energy sector's earnings were similar to last year: Coal export shipments and prices were lower: 
Following a slight recovery in the sterling average price of oil compared with last year; oil and gas earnings rose, though 
production was lower: 

Outlook. It is anticipated that satisfactory returns will continueto be achieved in RTZs industrial sector with its 
important businesses in speciality minerals and chemicals, manufactured products and services. The prices of non- 
ferrous metals are currently higher than the average prices forthefirst six months of1987 and the balance of supply and 
demand is betterthan for a considerable period. In addition, iron ore sales for the remaining months of theyear are likely 
■to be hfeherthan for the first six months. Earnings from energy are usually higher in the second half of the year, largely 
because of uranium deliveries, although the difference is likejy to be less marked this year than last. 

Proposed share split and consolidation. The RTZ ordinary share price at the dose of business on 
16th September, 1987 was 1355p. The directors propose a share split and consolidation resulting in the issue of five 
ordinary or accumulating ordinary shares oflOp each in place of every two existing shares of 25p each. An explanatory 
circular is being sent to shareholders. 

£ millions 






Group turnover 




Net profit on ordinary activities 
attributable to RT2 shareholders 




Earnings per ordinary share 

36.23 p 


78.91 p 

Dividends per 25p ordinary share 









Terry Povey on the tactics and players in the bitter battle for Guinness Peat 

How the New Zealanders gained the initiative 


THE BATTLE for Guinness 
Feat Group is still raging— 
or so the share stake com- 
muniques from Hr Robert 
MaxwelTs Hot born headquar- 
ters appear to indicate. The 
publishing and printing mag- 
nate yesterday announced an 
increase In bis GPC holding 
to 6.4 per cent, 

Equiticorp, the New Zea- 
land banking and Investment 
group which on Thursday in- 
creased Its offer for GFG to 
li5p-a-share, which values the 
target at £356m, now sits on 
39.2 per cent of the UK com- 
pany's issued capital. The 
bidder believes that It has 
already won the day and that 
Jffr Maxwell is engaged in a 
M futile spoiling action.” 

There is more than one ele- 
ment of irony in Mr Max- 
well's involvement— it was the 
ubiquitous publisher who, 
supported by MM. at the last 
minute successfully blocked 
GPG's bid for Britannia 
Arrow almost two years ago — 

and GFG has been considered 
vulnerable to predators ever 

Secondly, it was the recast 
introduction of the publisher 
of the Mirror and the People 
to the GFG farrago, 
apparently with the en- 
couragement of Hr Alastair 
Morton, GPG's abrasive chair- 
man, Chat convinced most of 
the hanking and fund 
m a na g ement group’s execu- 
tives of the need to come to 
terms with Eqoiticorp. 

Certainly th eidentlty of 
some of the 'white knights’ 
who too kan Interest in GPG, 
was a major factor In the 
nof the management 
of Us key US subsidiary, 
Fortsmann-Le ff, to sell most 
of their shares to the New 
Zealanders. It also led Lord 
Kissm, GPG's founder, to 
Indicate his approval of them 
by underwriting (he increased 

The introduction of Mr Mex- 
weD Is seen by many as the 
third major gaffe made by 

GPG since April when Equlti- 
eorp purchased its initial 
quarter stake in the UK 
group. Then Hr Horton 
reacted in a customary dis- 
missive manner, tolling all 
and sundry that the New 
Zealanders were Slater 
Walker look-a-Ukes, with 
hardly a million of two to rub 
between them. 

When Eqoiticorp asked for 
three board seats- this reac- 
tion was repeated— in spades. 
However, the need for Eqniti- 
corp’B support for a share 
issue to fund an acquisition 
caused the GPG leaderritip 
to change Its tune. The New 
Zealanders obtained two seats 
on the board pins, through an 
underwriting arrangement, 
built Its stake up to almost 
30 per cent. 

Gaffe number two was the 
Guinness Mahon management 
buy-in incentive scheme — the 
plan to acquire eight execu- 
tives to run the group's 
merchant bank that, accord- 
ing to internal management 

figures, would have led to a 
£38m payout in 1992. GPG’s 
refusal to put this issue 
before shareholders provided 
Eqoiticorp with an unparal- 
leled opportunity to go on 
the attach. 

Further, a death in Ger- 
many led to ownership of a 
major parcel of shares passing 
from father to son — the shift 
of loyalties allowed Eqaiti- 
corp to snap up another 5.6 
per coat and obliged it to 
launch its HOp-a-share bid. 
On the defensive, GPG’s 
board revealed the details of 
the >«air escheme. And In 
spite of the artfully worded 
19-page release, the New 
Zealanders were given a pre- 
sent of round one in the bid 

However, it was still the 
view of Mr Mortem that 
Eqoiticorp eoC* not possibly 
succeed against his combined 
might- Others in the GPG 
camp were not so sure— many 
more fearnl that a long 
drawn oat battle over the 

control of a people’s business 
would lead to the key staff 
leaving in droves. 

So when the only white 
that Lazards and Mr 
Morton could come up with 
were Mr Maxwell or Can ad ian 
financiers, the Belzeberg 
Brothers, the reaction of 
GPG’s executives was that 
the time had come to open 
talks with Eqoiticorp. It was 
as a result of these 
“amicable” discussions and 
the prospect of a "satisfac- 
tory working relationship ” 
between the two sides, that 
Eqoiticorp increased its offer 
last week. 

But Mr Maxwell is dearly 
not reconciled to an Eqttitf- 
corp win at 115p-— apart from 
anything else he would lose 
money. Mr Morton would 
still dearly like to prove aQ 
around him wrong, to “ blast 
the New Zealanders out of 
pride intact, head off for the 
next top-level Eurotunnel 
fund raising meeting. 

Equiticorp: plenty of staying power 

WHEN ONE of Mr Robert 
Maxwell's aides approached 
Equiticorp recently, offering to 
buy it out of Guinness Peat, 
he expressed surprise that the 
New Zealaners were not quak- 
ing with fear at the approach 
of his publisher master. 

However, like Alastair 
Morton, executive chairman of 
the besieged banking and fond 
management group, Mr Maxwell 
a p oears to have seriously mis- 
judged the staying power of the 

Pan of the reason for this 
misjudgment lies in a too quick 
dismissal of the resources of 
a youthful group which cele- 
brated its third birthday in 
April by spending £83m on a 
quarter stake in GPG. 

Equiticorp may have only 
been founded in 1984 but its 
leading lights — -Allan Hawkins 
(chairman and 40 per cent 
shareholder) and Grant Adams 
(deputy chairman with a small 
stake)— are accountants by 
trade (like many Antipodean 
entrepreneurs) and were both 
senior executives in Marac. 
New Zealand's largest non-bank 
financial services group, for a 
decade starting in the early 

Mr Hawkins, aged 46, went 
on from Marac to become the 
managing director of Weetpac's 
New Zealand merchant banking 
subsidiary. Mr Adams, aged 

48, stayed with Marac, becoming 
managing director an 1981. until 
leaving to Join up with Mr 
Hawkins an the formation of 

From its launch, with a share- 
holders funds base of NZS3&m 
(which compares with March 
1987's NZ$500m) Eqoiticorp 

pursued a two track growth 

First, tihere are the opera- 
tions of its finance group (total 
assets NZ$994m), which encom- 
pass a commercial lending port- 
folio, corporate finance and 
money market and treasury 
operations. It >is the lending 
operations which account for 
most of the group’s 330 per cent 

Second, there are the Invest- 
ment activities. In New 
Zealand the most important of 
these is a 499 per cent holding 
In Feltex, a carpets, coverings 
and retail chain which is New 
Zealand’s 16th largest company. 
There are also major boldines 
in electronic consumer goods, 
property development pulp 
and chipboard, and horticul- 
tural products. 

■ In Australia is the 58 per 
'cent owned and publicly qnoted 
Equiticorp Tasman, or ET as 
It is affectionately known. This 
has been involved in several 
major corporate battles. One 
of which was a A$19bn struggle 
for control of chemicals major 

Grant Adams (left), deputy chairman of Equiticorp Ann 
Hawkins, chairman 

ACT (which was profitably lost). 
Another involved a A$650m 
clash with the UK’s Redland 
over Monier, the building pro- 
ducts group. Redland has 
obtained 50.3 per cent of 
Monier but now has to cope 
with having ET as a 30 per 
cent plus minority shareholder. 

For the year to March. 
Equiticorp reoprted net profits 
of NZ$1049m more than triple 
the previous year’s result and 
twenty times that of 1984-85. 

Equiticorp ’s window to the 
outside world is Hong Kong 

where its 75 per cent owned 
but separately quoted Capital- 
corp subsidiary is based. The 
first 253 per cent stake in 
Guinness Peat was acquired by 
the Hong Kong arm. 

However, it Is Equiticorp 
itself which is bidding for GPG 
today. Wtfh 39.2 per cent of 
the target's shares already pur- 
chased and a growing rapport 
with the UK group’s operating 
management what are the New 
Zealanders* plans for Guinness 

Mr Adams and his London 


ii. .•••. tdr. - • 



From the statement by the Chairman, Sir Ronald Mdntosh KCB: 

"Vour company continues to make good progress and the 
prospects are encouraging." 

"With a high level of orders in hand at the end of June 
and good order prospects in the main business segments, the 
outlook for the second half of the year and the carry forward 
into 1 988 is promising." 

'The integration of Baker Perkins into the enlarged group 
" has gone extremely welL 

Half year to \fearto The' potential benefits of 

waf June i986 31 1986 ^ mer 9 er b"® been 

£m Em Em widely recognised and 

this has made it possible 

298 195 417 to implement necessary 

“ ~ ~ changes quickly and 

16J 108 effectively Motivation 

22.1p 20.9p 52.5p throughout the group is 


8p 7p 12p "With the recent 

acquisitions in the United 

Kingdom, the USA, Denmark and Germany APV Baker now 
enjoys a broader base than any. of its competitors. No one 
industry segment dominates the product portfolio; there are 
modem manufacturing facilities on both sides of the Atlantic; 
and sales in North America and continental Europe are of 
comparable magnitude. This should provide useful protection 
against fluctuations in individual markets and currencies." 

"In the last 18 months, your company's share price has 
more than trebled. The Directors are recommending a 5 for 
1 share split." 

(A copy of the full interim announcement is available on 
request from The Secretary, APV Baker PLC, Manor Royal, 
Crawley RH10 2GZ.} 




(Half year figures unaudited) 

Half year to 
.30 June 

1987 1986 

Cm Em 


31 Dec 





Profit before taxation 




Earnings per ordinary share 

22. Ip 



Dividend per- ordinary share 




The FT proposes to publish 

this Survey on; 

SEPTEMBER 21 1987 

For further information 
please contact: 


J Through the j 
Weekend FT 
Property Pages 

I f ATX I 

Process plant for the world's food and beverage industries 

■ NOV J 

forecast of 

team are, contrary to (he City’s ! 
expectations of Antipodean 
entrepreneurs, cautious fellows. 
He expects to spend several , 
months discussing possibilities | 
with the incumbent manage - ' 
merit at GPG— none of whom, 
with the exception of Mr 
Morton, is due for a change. 

At group level the task of 
cainnan (to be recruited within 
the UK) and chief executive 
(currently held by Michael 
Kerr-Dineen) will be split but 
Its board " will not be swamped 
by Equiticorp.” The plans are 
for thtree Equiticorp executives 
— Hawkins; Adams and Peter 
H ant the managing director of 
Capitalcorp-^to join the exist- 
ing executive directors and for 
three non-executive directors, 
one of whom, to he c hairman, 
to be found in the UK. 

For Guinness Mahon, the 
merchant banking unit of CPG, 
a new chief executive win be 
recruited — Equiticorp says it 
has already received several 
approaches from interested 
parties. Mr Adams is deter- 
mined, however, to avoid the 
“ A-team, B-Team ** approach he 
sees as implicit in the sow 
defunct management buy-in 
scheme. “Contrary to the im- 
pression given by some there 
are a lot of good people doing 
good work within Guinness 
Mahon.” he said. 

—Equiticorp is clearly very 
happy with the US fund man- 
agement activities — an area 
in which it lacks experience as 
a group. It .is concerned _to see 
what can "be done to develop 
the relationship with GPA. the 
lucrative Irish aircraft leasing 
activity in which GPG has a 
22.6 per cent holding. Some 
Involvement of Guinness Mahon 
with GPA Is one possibility; an? 
other is an international link- 
up of GPA with Ansett — the 
Australian airline which is ex- 
panding its leasing operations. 

Equitcorp clearly feels it has 
come very close to victory — It 
would still like a 60 per cent 
stake — and according to Mr 
Hunt is determined to play out 
what it hopes will be the dosing 
stages of Its takeover of GPG 
“with dignity.” “But,” he adds, 
“if anyone thinks we will run 
away from a fight they’ve got 
Equitcorp all wrong.” 

Corrugated board machin- 
ery produced profits of £Un 
(£0.6xn) on sales of £I6.7m 
(£17Jimi and were expected 
to continue at this Improved 
level. Langston UK bad a poor 
start to the year but subse- 
quently built up a much im- 
proved order book, in part 
thanks to a recently an- 
nounced Chinese order. 

The figures also include the 
first significant contribution 
— £Um— from Molins 5 flex- 
ible machinery system 

Group turnover was £56 Am 
(£S&2m), the tax charge 
£L7m (£0.9m). Earnings per 
share after tax totalled 5-2p 
(12£p). The interim dividend 

Pennant bid 
for Country 
and New Town 

By P*rf Qieeseright, 
Property Correspondent 

Pennant ' UK, a subsidiary 
of -Pennant Holdings of 
Australia, yes t erday made its 
obligatory bid for. the whole 
of the issued share capital of 
Country and New Town Pro- 
perties that it does not 
already own and urged share- 
holders not to accept it 

The situation arises from 
the purchase last mouth for 
£30m of 44 per cent of 
Country and New Town’s 
shares from British and Com- 
monwealth. Since then it has 
bought further shares in the 
market and currently holds 
51 per cent. 

This therefore triggered an 
unconditional offer to the 
shareholders of Country and 
New Town at a price of 197p 
a share — what Pennant had 
been paying on the market. 

Pennant's Intention though 
is to hold only 49.9 per emit 
of Country and New Town 
and wants the company . to 
retain its listing. So shares 
which are sold to Pennant are 
likely to be sold on. 

“ Arrangements have been 
made with Hoare Govett, Pen- 
nant UK’s financial advisers, 
whereby sufficient CNTP 
shares will be placed with 
institutional Investors to en- 
sure that the listing is main- 
tained and that there is an 
adequate market in the 
shares,” shareholders are 
being told. 

Mr Gerald Newton, the 
CNTP chairman, who has wel- 
comed the Pennant purchase 
of CNTP shares, said that he 
would retain at least 500,00ft. 

On the market yesterday, 
CNTP shares were , unchanged 
at 198p. 

Financial Times Friday September IS 1987 

All-round growth 
boosts Laporte 

to £34m halfway 

Mollis, the cigarette-mak- 
ing equipment company which 
recently fought off a £93m 
takeover bid from Tozer 

Kemsley & MiHbo arn, y ester- 
day announced interim pre- 
tax profits of £3 Jin, down 
from £4J5m in the same period 
of 1986. 

However, the company had 
already warned shareholders 
of these figures during the 
bid battle, when it also made 
a full-year pre-tax profits 
forecast of not less than filftm, 
against £3m last year. Melina 
reiterated yesterday that It. 
expected to meet this fore- 
cast, together with ea r nings 
per share of 2L5p. 

It said the drop in profits 
at the interim stage was 
wholly attributable to the 
^haring of tobacco machinery 
deliveries which, * in this 
year of highly important 
change from older genera- 
tion products to the new eog- 
arette making and packing 
machinery. Is unavoidably 
weighted towards the second 
half of the year.” 

Trading profits from 
tobacco machinery totalled 
(£4Jm) on sales of 
£33.7m (£45.7m) — and It 

pointed out that 1986 first 
half sales were an uncharac- 
teristically high proportion of 
that year's turnover. 

Laporte Industries (Hold- 
ings), chemicals group, in- 
creased pre-tax profits by 18 
per cent from £2S.8m to £34m 
and turnover rose from 
£205£m to £224.7m in the six 
months ended June 28 1987. 

Mr Ken Minton, chief execu- 
tive, said yesterday that the 
benefits, from the group's pro- 
gramme of investments in the 
UK and overseas were con- 
tinuing to come through and 
had contributed substantially to 
the profits increase. 

All the core business had 
performed weR with the desired 
high rate of growth. Interox, 
the hydrogen peroxide group 
owned Jointly with Solvay of 
Belgium, continued to make 
progress and contributed 
£15Jgm (£14-4m) to pretax 

The acquisition of Coznpu- 
graphics International, an- 
nounced in July, would 
substantially benefit the elec- 
tronics businesses while the 
recent purchase of Vinings In- 
dustries of Atlanta, Georgia, 
would provide a global oppor- 
tunity for the expansion of the 
technical and commercial 
strengths of Laporte in the 
paper and water treatment 

Mr Minton said that the 
group’s financial position 
remained strong with a healthy 
hai»n«» sheet and excellent 
ranh Bow. Commitment to 
growth by expension of the core 

businesses remained the highest 
priority and plans for farther 
acquisitions were well advanced. 
A good outcome for the year 
as a whole was expected and 
prospects for sustained growth 
were excellent, he said. 

Taxes amounted to £U.6m 
(£l0m) and minority debits 
£100.000 (£100,000). Earnings 
per 50p share increased to 16.3p 

The interim .'dividend was 
increased to 4.4p (3Bp). 

• comment 

Laporte has for several years 
beeo cranking up the margins 
at Interox but the limit must be 
dose now it has reached 20 per 
cent. That need not cause too 
much concern. Worldwide sales 
of Interax products are - still 
growing by about a tenth every 
year and Laporte is mean- 
while boosting both turnover 
and margins at the core busi- 
ness. Among the achievements 
is 1 he growth of the timber 
treatment business which in 
four yeans has been built up 
from nothing to one with a turn- 
over In the US of more than 
£60 m- Laporte aims to increase 
pre-tax profits by at least 15 per 
cent a year and that should 
be easily achievable this year 
and next. With £7 4m in view 
the shares are trading on a 
prospective p/e of about 15. The 
downside seems limited and the 
shares could receive a boost 
when the company- goes tor its 
next acquisition. 

first Security merging 
with Hawtal Whiting 


first Security Group, the 
electronic sensors, car safety 
and security systems group 
partly owned by -United Tech- 
nologies of the US, Is xargfpg 
with Hawtal Whiting, the 
Essex-based motor industry de- 
sign and engineering consul- 

The deal takes the form of a 
recommended offer by FSG for 
all of HawtaTs capital, and 
values Hawtal at around £37m. 

Ur Fred Westlake. FSG’s 
riuHmum, said last night the 
merger would allow the new 
grouping to exploit more 
effectively opportunities In the 
motor and aerospace Industries. 

Jointly, the nw group would 
be able to build up th ability 
to proride lectronic, design and 
engineering.. .. products,. 
services covering most elements 
making up a vehicle. 

Only two. weeks . ago,, Hawtal 
also received full Giril Aviation 
Authority approval as a 
supplier of aerospace technical 
services. 4 

The merger will serve to 
reduce Hawtal’s previously very- 
heavy reliance on General 

Motors of the US, from around 
95 per rent of its turnover to 
less than 50 per cent within the 
new grouping. 

The weakness of this dollar* 
related business was the prin- 
cipal reason for a drop in 
Hawtal’s pretax profits from 
£4.S4m on turnover of £S4.49m 
for the whole of last year to 
£810,000 on a £15-8m turnover 
in the first half of the current 

Announcing the merger yes- 
terday, FSG said it already bad 
acceptances amounting to 62 per 
cent of the Hawtal capital. 

Six new Ifip FSG ordinary 
shares of 10p are being put up 
for each five Hawtal shares of 
5p, which values Hawtal’s 
shares at 504p. Hawtal’s traded 
at 43Sp imediately before ' its 
suspension on Monday. 

Alternatively, Hoare Govett, 
FSG'b brokers, are offering a 
cash alternative of 485p a share. 

Full acceptance of the offer 
wiQ result in up to 8.7m new 
FSG ordinary being issued, 
rep reen ting about 43 per rent 
of the enlarge capital of FSG. 

to buy ADS 

FKB Group, tiie sales promotion i 
and marketing services busi- 
ness, is buying ADS Group, a 
’Manchester -based, marketing 
services company, for up to 

Desoutter up 
20% to £3m 

I It will pay £1.75m hi cash on 
completion, with further 
deferred payments over the 
next three years In cash or 
shares dependent on future 
profits performance. 

ADS, founded in 1976, pro- 
vides a broad marketing service 
and clients include Ferranti, 
GEC, Great Universal Stores 
and Crown Paints. Pre-tax 
profits last year totalled 
£172,000 and it has warranted 
profits of not less than £300,000 
In the year to September 30. 

FKB, which recently moved 
from the USM to the main 
market said the acquisition 
would provide the group with 
“ one of the UK’s leading direct 
marketing agencies ” and en- 
, hance the group’s existing 
I capabilities in this field. 

A significant increase in 
margins baa led to Desoutter 
Brothers (Holdings), precision 
mechanical engineers, produc- 
ing a 20 per rent increase from 
£2.45m to £2.95m in pre-tax 
profits In the first half of 1987. 
The improvement In sales was 
from £19.02ni to £2021m. 

Mr R. C, Desoutter, chair- 
man, said provided overseas 
currencies, particularly in 
Europe; maintained their 
present levels against sterling 
there was a good prospect of 
sustaini n g the improvement 
through the remainder of the 

Interest payable for the half 
year was £115,000 (£198,000) 
and UK and overseas taxation 
amounted to £1.05m (£867,000) 
leaving attributable profits of 
£L9m (£1.59m) for earnings of 
15.14p (12.6p) per 25p share. 

The interim dividend is 
raised from 2.5p to 2.7p. 

constitute an invitation to the public to subscribe tor or purchase any shares. 

a. tt does not 

Camotech pic 

Oncorptnted under re Companies Am 1948 to 1BB1. No. 177I599J 

Ordinary Share Capital 

Authorised. "KSd 

£950,000 in ordfriary shares of lOp each £700 000 

Through Its subsidiaries, Camotech pic designs, manufacturers and assembles narts far mrinue 
companies notably in the autorTKrive and a rt^ w «K«*nwes Pans far various 

The Council of The Slock Exchange has gr a nted permission for the whole* n i ,, . . 

— » «PW of Cam otech pk ff* vSE STmw oStaL’E 

commence on Monday. 21st September, 1987. Particulars of Camotech pic may be 

usual busnras hours Item its Sponsor, Guldeliouse Securities UmtaSupto 

October, 1987 and are also available in the ExteJTWiti Market Service ^ a mauding 9th 

Camo te ch pte, 

Stewart House, 
tfiHbottom Rood, 

Sands Industrial Estate, 
High Wycombe, 
Buckinghamshire HP124HJ. 

Sj«r»ore and Financial Advisers: 

Newgate Street, * 
London EC1A7BA 

16th September, 1887 


«* ■ 

i<>! Lind 


Financial Times Friday September 18 1&87 





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Acquisitions help Abaco 
boost profits to £6.5m 


Abaco Investments, financial 
services company, yesterday re* 
ported a near five-fold increase 
in pre-tax profits to £6 .55 m in 
the year to the end of June, 
while turnover increased from 
£16J3m to £46 ,67m. 

The rapid growth of the com- 
pany reflects an aggressive 
acquisition programme, with 
much of it funded by share 
issues. However, earnings per 
share also moved sharoly ahead, 
more than doubling from 1.0 So 
to 2Jlp. A full-year dividend 
was declared at 0.4 p — up from 

Mr Cameron Brown, chief 
executive, said that organic 
growth contributed only to a 
minor part of the improved per- 

“At this stage of Abaro’s 
growth, it is primarily acquisi- 
tions," he said yesterday. 

He added, however, that 
strong organic growth bad been 
experienced in many of the 
businesses acquired. This 
resulted in part from savings in 

management costs in what were 
fragmented fee-earning pro- 
fessional firms. 

The results could not be 
taken as a reflection of the true 
earnings capacity of the cur- 
rent business of the group, Mr 
Brown said, because of the 
number of acquisitions com- 
pleted throughout and after the 
end of the financial year. Since 
July 1988 Abaco has com- 
pleted 26 acquisitions, 12 effec- 
tive sonce the end of the finan- 
cial year. 

The enormous expansion of 
the group has led Abaco to 
adopt a five-division structure 
and divisional boards are set to 
be in place by the year end 
which are to retain significant 
management autonomy. The 
divisions include residential 
estate agencies, personal finan- 
cial services, commercial estate 
agencies, loss adjusting, and 
other activities. 

Property - related services 
accounted for some 70 per 
cent of profits. Turnover in 
residential estate agencies 

reached £14£6tn, with operat- 
ing profits at £2. 99m. Personal j 
financial services, ‘ including 1 
mortgage broking and insur- ■, 
ance broking, contributed ! 
£6.63m to sales ydn £1.75m to | 
profits. Sales in the commercial j 
estate division reached £3.69m, 
with profits of £1.64m. 

The loss-adjusting division 
was built through the acquisi- 
tion of Toplis & Harding, 
Trundle Heap & Baker, John 
Lewis and Uaxson Young Asso- 
ciates, with operating profits of 
£1.48m on a turnover of 
£ 14.83m. Other activities con- 
tributed fljllm in profits and 
£6.7 2m in turnover. 

Earnings data for the com- 
pany were calculated on the 
basis of a weighted average of 
number of shares in issue, 
which came to 186.4m shares, 
compared with 184.9m in the 
previous year. Actual shares 
in issue at the end of June 
reached 221m. up from 122m In 
the previous year. 

Fergabrook cuts its losses 

Fergabrook Group, a distri- 
butor of consumer merchandise 
cut pre-tax losses from £2.15 
to £771,000 on turnover reduced 
substantially as result of re- 
structuring from £31. 67m to 
£5.23m hi the first half of 1987. 

The loss per 20p share of this 
USM-quoted company was cut 
from 8.49p to 3.04p and the 
directors said that the comoany 
would not be paying a dividend. 

Mr Richard King, chairman, 
said that the reduction In turn- 
over was largely because of the 
disposal of TriTrade, Ferga- 
brook’s wholesaling of DIY, 
gardening and domestic hard- 
ware products arm which, had a 
turnover of £23m 

The results reflected the sea- 
sonal nature of the toy busi- 
ness which represented a very 
major part of the turnover. The 
second half of the year would 
show considerable improvement 
as a result of Christmas-related 
sales. They also indicated that 
the benefits of the restructuring 
were beginning to be seen. 

Sales in the toiletries division 
in 1987 would be substantially 
in excess of last year and Mr 
King said that he was confident 
that the division was now cap- 
able of profitable growth. The 
security and electrical products 
division was expected to make 
a small loss this year and to 
contribute to group profitability 

next year. 

The company's forward sales 
position for the current year 
gave it utmost confidence that 
it would return to profitability 
for the full year, bearing in 
mind the current seasonal 
nature of its business. 

Turnover on the continuing 
businesses increased by 50 per 
cent. Losses on the continuing 
businesses for the comparative 
period last year were £2fim. 

Distribution of toys through 
Rainbow Toys, the company’s 
main activity, were substan- 
tially ahead and would con- 
tinue so for the full year. He 
said that the division would be 
profitable for the year. 

Sale of land helps profi ts Clarke NichoIIs 

. . « , „ . . ahead midterm 

nse at ixarton Engineering HALF results froi 

O o Clarke Nleholls 4 Coombs. 

Garten Engineering, manufac- 
turer and distributor. . of engin-> 
earing components . and special , 
fasteners and.’ dealer in land, 
upped pre-tax- profits - from 
£290.000- to £427,000 on turn- 
over ahead' from' £7.0fim at 
£7.49m in the first half of 1987. 

The directors declared an 
interim dividend of l_25p (lp) 
and after tax of £126,000 
(£41,000), earnings per share 
rose from 6.76p to 8J)8p. 

The improvement was thanks 
partly to an £88,060 excep- 
tional credit resulting from the 
sale of part of an area of land 

geographically unrelated to the 
comipany's ' - _ manufacturing 

The directors said- that a 
rapid bufld-up in demand had 
exceeded the company’s expec- 
tations and there were good 
indications that the high level 
of forward demand would be 
sustained well into 1988. 

Production was being In- 
creased to match demand and 
the company would expect a 
continuing high level of sales 
and. some improvement in 

ahead midterm 

FIRST HALF results from 
Clarke Nieholls 4 Coombs, 
property investor and developer, 
showed . . .turnover : incr e asing 
from £1.97m to £2.76m and pre- 1 
tax profit rising from £407,000 
to. .£720,000. * . 

Gross rental ' Income was up 
to £911,000 (£648,000) and 

property development to £L85m 
(£L32m), including a useful 
trading surplus from the acqui- 
sition and disposal of a properly 
in Victoria. 

The second half started 
encouragingly, the directors 

Earnings were 4.6p (23p) and 
toe interim dividend is Lip 

to £1.35m 

at midway 

A STRONG UK market for 
motor vehicles which bene- 
fited all sectors of Its busi- 
ness helped Lancaster, retail 
motor trading group, boost 
taxable profits by 67 per cent 
from £810,000 to £1.35m in 
first half of 1987. Turnover 
moved up from £37m to 

Mr Jeremy Brown, chair- 
man, said that trading In the 
second half of the year 
started well, although higher 
operating costs, notably in- 
creased property rentals and 
costs associated with com- 
puterisation and decentralisa- 
tion were likely to limit pro- 
fits growth in the period. 

Nevertheless, with the cur- 
rent strong market in the 
motor industry he looked for- 
ward to the future with con- 

He said that the company 
continued to review oppor- 
tunities for further expan- 

Lancaster, which obtained 
a full market listing in July 
this year, paid increased tax 
of £439,000 (£257,000) and 
earnings per 25p share rose 
from 4.4p to 7.2p. 

Mr Brown said that as in- 
dicated at the time of the 
company's flotation it would 
not be paying an interim divi- 
dend. However, a final divi- 
dend for 1987 would be pay- 
able In May 1988. 

Since the float, Lancaster 
had opened its new facility 
at West Thurrock. Plans for 
the relocation of toe Mer- 
cedes-Benz dealership at Hert- 
ford were progressing satis- 
factorily and negotiations 
were to hand to acquire an 
excellent site dose to toe 
town centre. 

repeats £2.8m 
at year end 

Westpool Investment Trust; 
an Investment holding com- 
pany with mainly listed invest- 
ments, announced unchanged 
pre-tax profits of £2A4m for 
the year to end-April 1987. 

The directors are recom- 
mending an increased final 
dividend of lJ35p (l.25fip) 
for a total 0.1p ahead ti.L7p. 
Earnings for the year rose to 
2.09p (L9p) basic, and fully 
dilated were L78p (L7p). 

Gross Income moved »hM^ 
from £SJ7m to £4J3m, which 
Included £2F7m (£2 .59m) in . 
dividends from London Mex^ 
chant Securities. -The group 
has not yet received its share 
of the LMS proposed final 
dividend for the year ended 
March 1987. That amount, 
£2.22 iii including the asso- 
ciated tax credit, will he re- 
flected in Westpool’s results 
for the year to April 1988. 

Tax was £783,000 (£886,000) 
and there was a £853,000 
extraordinary credit (£L02m 

Ian Hamilton Fazey on Miller and Santhouse’s rapid progress 

Seeing a market for expansion 

Miller and Santbouse, the 
Liverpool-based opticians which 
floated on the USM in October 
19S6 and which announced good 
first full-year’s results as a 
public company this week, is 
having a customarily busy 

On Monday it opened the 
company's 46th “ sight centre " 
— a departure from its normal 
practice of choosing only prime 
positions in busy high streets, 
because this one Is Britain’s 
first “ drive-in " opticians. Four 
more shops of the conventional 
sort are being fitted out and 
will open before October. 

The latest Miller and Sant- 
house outlet may not be that 
much of a departure, however. 
It is sited on the successful 
out-of-town Retail World Park- 
gate shopping " complex near 
Rotherham. and most . . of 
Britain’s big retail names are 
already there. 

This means that Mr Maurice 
Miller, the company’s joint 
founder and its marketing 
expert, is ensuring that his 
products -and services are in a 
place where potential cus- 
tomers turn up ■ in large 

Other “ drive-ins "—or rather 
“drive-tos," since you have to 
get out of the car to have your 
eyes tested— are likely to figure 
next year 'when he launches his 

company's assault on what for 
it is a virgin South-east - 

By then, he thinks that cash 
flow will be so good that all 
future expansion can be paid 
for from revenue. The capital 
raised from flotation has 
financed the current wave of ex- 
pansion, the speed of which 
can be gauged from the fact 
that the company had only 22 
outlets when it went public. 

If there are four “P’s" in 
marketing— products,- place of 
sale, prices and promotlon-LMr 
Miller has ensured - that his 
company has combined. _ them 
into what looks like a winning 


The City thinks so too: Miller 
and Santhouse’s shares went on 
offer at lOfip. opened at 133p, 

closed at 150p at the end off 
the first day. and have non 
looked bade since. Prc-rax pro-| 
fits have risen from £57,000 in' 
1983 to £362,000 in 1986 and this, 
week toe group announced a| 
further jump to £611,000 for the! 
year to June, as well as a Smj 
rights issue. The shares closed! 
last night at 665p, down 5p. r 

The reasons for the company’s 
success becomes clear as Mr 
Miller whisks breathless visitors 
round his rabbit warren of a 
headquarters in Lord Street, 
Liverpool's most famous shop- 
ping thoroughfare. 

It is a rabbit warren because 
the company needed more space 
above its original shop- Liver- 
pool’s decline meant many 
empty neighbouring offices in 
the long terrace of high street 
buildings. Miller and Santhouse 
took them over- from the first 
floor upwards and knocked 
through to expand sideways in 
both directions. 

This has given the space for 
stock, manufacturing, adminis- 
tration, an in-house retail design 
studio (to get point-of-sale pro- 
motion right and consistent 
nationwide) and the company's 
training centre. 

The business is run by Mr 
Miller. Mr Jeffrey Santhouse. a 
fellow optician who supervises 
professional standards nation- 
wide, and Mr Alan Tinger. who 
sold his share in a two-man 
chartered accountancy practice 
to join his major client as fin- 
ance director for the flotation. . 

There seem to be four 
reasons for success — a small 
top management team that 
knows what it is doing, sound 
marketing, exceptionally good 
managerial controls which 
make use of the latest elec- 
tronic point-of-sale (EPOS) 
technology, and well-motivated 

Mr Miller spent his first few 
years after qualifying naming 
his own optical wholesaling 
business. He sold it to set up 
in practice with Mr Santhonse 
hut was. as Mr Tinger puts it. 
“a frustrated retailer in far too 
small a business.” 

As the practice expanded it 
used Mr Miller’s past experience 
and contacts to cut out middle 
men by buying direct from 
manufacturers. Now he buys 
massively and e x c l usively 

direct from the most ‘fashion^ 
able designers and manufac- 
turers in toe Far East and 
Eurone. _ . 

With fewer links in toe 
chain, the company is able to 
score heavily on pricing. 
Typically, it is £10n£20 a pair 
cheaper for the equivalent Pair 
of spectacle frames from com- 
petitors, It then scores through 
having a glazing facility in 
every shop, so that all but com- 
plicated spectacles are ready in 
about an hour, a standard of 
service most people expect to 
find only in places like Hong 

It uses its EPOS system to 
control stock levels and assess 
trends in public taste. Each till 
in toe network of branches— 
which spreads out from Mersey- 
side north into Scotland and 
westwards and south into York- 
shire and the Midlands— feeds 
back automatically to tbe bead 
office computer with full details 
of each transaction. 

The print-out from each till 
is also useful to toe customer 
since it contains their prescrip- 
tion. A chit with each pair of 
glasses offers 20 per cent off a 
second pair made to tbe same 
prescription within a year. 

The question is whether al 
this will be ruined by growth 
as sheer size makes managerial 
control more difficult Mr 

Miller says that toe EPOS tills 
and technology will do their 
job well whatever the com- 
pany's size. The key will be 
keeping staff motivated. 

Many professional ' staff 
bought shares on flotation and 
have thus seen the value of 
their holdings rise dramatic- 
ally. A share option scheme to 
be introduced soon for key 
,-taff is likely to make them 
;ven more eager to contribute 
to the business's success. 

Under this, some rewards 
packages will include options 
on 10,000, 20,000 and— for some 
senior people— 30.000 shares. 
If the share price continues to 
hold up and develop, this should 
mean substantial nest eggs for 
many, «h«ii fortunes for those 
whose role will be crtiticaL Mr 
Miller thinks this will help 
motivation mightily. 

However, even with 300 staff 
and coining up to 50 branches. 
Miller and Santhouse is never- 
theless small in ophthalmic re- 
tailing. Will giants like Boots 
Optical and Do 11 and and Aitchi- 
son let them get away with an 
increasing market share re 
prime high streets? 

Mr Tinger says: “We keep 
doing what we think is right 
and don’t worry about them. 
We wait for the best high 
street sites and open there, 
wherever toe competition is. 
One of our most successful 

shops was opened next door to 
a Boots Optical branch. 

“ There were already II opti- 
cians in Warrington and when 
we opened slap in the middle 
of the shopping precinct, the 
trade thought we were mad. We 
are doing very well and, we 
think, better than everyone else. 

“ Competitors like Do! land 
and Altchison are very good 
and we respect them, greatly. 
But they have 600 branches and 
cannot respond all that quickly. 
We believe we have a flying 
start In advanced retailing tech- 
nology and the incentive 
throughout the company to win 
everywhere we operate," he 

This advertisement is issued in compliance with the reotiiremenis of the Council of The Stock 
Exchange. It does not constitute an invitation to the public to subscribe for or to purchase any 
securities m British & Commonwealth Holdings PLC. 

■ BRITISH & ■ 


British & Commonwealth Holdings PLC 

(incorpor a ted in England and Wales No. 556729) 

Issue of up to 72,453*396 new Ordinary Stock Units of lOp each an 
£154,502,602 nominal of 475 per cent Convertible Redeemable 
Preference Shares of £1 each in connection with the 
proposed acquisition of 

Mercantile House Holdings pic 

Application has been made to the Council of The Stock Exchange for the above- 
mentioned securities to be admitted to the Official List 

listing Particulars, which include particulars of the 4.75 per cent Convertible 
Redeemable Reference Shares of £1 each and Supplementary Listing Particulars are 
available in the Extel Financial Services and may be obtained during normal 
business hours on any weekday (except Saturdays) up to and including 
2nd October, 1987 from: 

British & Commonwealth Holdings PLC 
Cayzer House 
2&4 St Mary Axe 
London EC3 A 8BP 

Phoenix Securities Limited 
London EC2M3YA 

Barclays de Zoete Wedd Limited 
Ebbgate House 
2 Swan Lane 
London EC4R 3TS 

de Zoete & Bevan Limited 
Ebbgate House 
2 Swan Lane 
London EC4R 3TS 

?le tor collection up to and including luesday, 22nd beptemcer, 1987 from the Company 
Announcements Office The Stock Exchange, Throgmorton Street London ECZ 

18th September, 1987 


Two Major Financial Services 
Conferences arranged by the 

Servlc8S from 

London, 15 & 16 October 1987 

The Financial Times stages a Retail 
Financial Services conference every 
second year and this October sees 
another forum reviewing the significant 
developments in Britain, Continental 
Europe and the United States. The debit 
card problems, an issue of considerable 
interest today; will receive particular 

Among the speakers who have agreed to 
participate are: 

Mr Foster L Abom 

John Hancock Mutual Life Insurance Go 

Mr Raoul Bellanger 

Groupementdes Cartes Bancames 

Mr Colin J Finch 

Hambro Countrywide plc 

The Hon Seymour H Fortescue 

Barclays Bank plc 

Mr Russell E Hogg 

MasterCard International 

Mr James Larkin 

American Express Company 






Please send me further delate. 

Financial Services 

-Gompetition & Co-operation 

London, 19 & 20 October 1987 

The Financial Times fifth Electronic 
Financial Services conference will focus 
on competition and co-operation in 
financial services and the problems 
financial institutions facein managing 
technology to cope with the demands 
presented by the increased competition 
and deregulation. 

Some of the speakers taking part Include: 

Mr Rudolf Bauer 

Commerzbank AG 

Mr Jacques De Keyser 

Generate Bank 


Lloyd's of London 

Mr Gene Lockhart 

Midland Bank plc 

Mr Bert Morris 

National Westminster Bank plc 

Mr Trevor Nicholas 

Barclays Bank plc 

Tb: HnandaT Tones Conference Organisation 
Itiraier House, Arthur Street; London EC4R SAX 
TO SW21 1355^ TWwc 27347 FTCONFG Fax:01-6238814 


□ Ratal Financial Services 
from now to 2000 

n qecftonic Financial Services 



Fax No: 

1Vpe of Bus 




Financial Times Friday September IS 1987 

UK maltsters face barley shortage 


BRITAIN'S TOTAL cereal har- 
vest this year is likely to be at 
least 2.25m tonnes or nearly 10 
per cent less than last year, 
according to figures published 
yesterday by the National Far- 
mer’s Union, 

The figures, the preliminary 
result of the NFU's annual 
cereal harvest survey, suggest 
for the first time that the coun- 
try's barley harvest could be 
almost as severely affected by 
the recent heavy rains as the 
wheat harvest. 

According to the NFU, the 
wheat »?rop is expected to be 
something under 12.25m 
tonnes, against nearly 14m 
tonnes last year, while some 

plans to 
curb gold 

By Phillip Smith 
in Dar n Salaam 

A minister in the Tan- 
zanian Government has con- 
firmed that approximately 
halt a tonne of gold is being 
smuggled out of the country 
each month. 

Hie Minister for Energy 
and Minerals; Mr A1 Noor 
Kassum, said this week that 
an inquiry into the escalating 
smuggling problem was to be 
launched, and a policy Intro- 
duced in Parliament to curb 
the trade. 

Large quantities of gold are 
reportedly being smuggled 
through Dar Es Sal am air and 
sea ports with the co-operation 
of licensed goldsmiths. 

A major source of the gold 
is the Buckreef development 
In the Geita district of the 
Kwanza region. Smaller 
quantities are mined by 
peasants using their bare 
hands and old redundant 
mines spread across the 

Gold production in Tan- 
zania dwindled to almost nil 
in the 1970s, but the Buck- 
reef mines — with an estimated 
life of IS years — were re- 
opened in 19S3. Commercial 
quantities of gold have been 
discovered on the fringes of 
the mines. 

The mining sector accounted 
for only 0.6 per cent of the 
country’s GDP in 1982, but 
this figure does not allow for 
extensive illegal mining; 

An investigation in the 
Sunday Times of Tanzania 
said that the miners sold their 
gold to both legal and illegal 
dealers instead of the state 
mining corporation (Stamico). 
Illegal dealers offer five times 
the Stamico price. 

“ We are aware that a lot of 
illegal gold is being smuggled 
out but it is difficult to give 
accurate figures,” Mr Kassum 
said. He confirmed that an 
investigation Into the prob- 
lem was to be conducted 

Gold plays an Important 
role on the black market in 
Tanzania. Traders smuggle 
gold out in exchange for a 
range of consumer items, in- 
cluding motor vehicles and 
clothing; However, the 
majority of the earnings are 
kept overseas 

9.25m tonnes o£ barley is antici- 
pated compared to 10m tonnes 
last year. 

However, the situation could 
well be worse than these broad 
figures suggest for thepremium 
malting barleys, which are 
grown principailv in the east- 
ern counties most affected by 
rain. According to one malting 
industry estimate, the amount 
of malting quality barley avail- 
able to maltsters could be down 
by 15-18 per cent. 

The malting industry used 
1.6m tonnes of barley last year, 
with a further 400,000 tonnes 
being exported. The very wet 
weather has affected not only 
the quantity but the quality of 

the grain. It is suggested that 

while yields may be down by 
5-7 per cent, a further 10 per 
cent may effectively be lost 
through poor quality. 

If the worst predictions are 
fulfilled, between 200,000 and 
300,000 tonnes may have to be 
Imported, some barley mer- 
chants believe. Within the 
European Community Denmark 
normally produces a healthy 
surplus of malting barley. It 
is not yet clear whether this 
will be the case this year, how- 
ever, as the Danish harvest has 
also suffered from poor weather. 

The Maltsters’ Association of 
Great Britain believes it is too 
early to be sure that imports 

will be needed, but it high- 
lights a further problem. 
Britain normally exports about 
300,000 tonnes of malt a year to 
third countries. The extremely 
high prices now being paid to 
farmers for high quality barley 
— up from about $130 a tonne in 
early August to near £155 a 
tonne currently'— could make 
UK malt uncompetitive. 

Of the normal barley crop of 
10m tonnes about 2.5m tonnes 
is used for brewing beer and 
distilling whisky. The balance 
of the crop is us ed for animal 
feed in the UK (some 3.5m 
tonnes), for seed (500,000 
tonnes) and for export for feed 
to third countries. 

Backing expected for tin quotas 


MINISTERS OF the seven- 
nation Association of Tin Pro- 
ducing Countries are to discuss 
the possibility of extending 
their current export quota pro- 
gramme by another year when 
they meet in Kuala Lumpur at 
the end of the mouth. 

Malaysia, the largest pro- 
ducer, believes that other ATPC 
members are prepared to con- 
tinue the quota programme pro- 
vided non-members, particularly 
Brazil and China, are willing to 
continue to cooperate by res- 
training their sales, Brazil and 
China will be sending observers 
to the ministerial meeting. 

The ATPC members — Indo- 
nesia, Malaysia, Thailand, Aus- 
tralia, Bolivia, Nigeria and 
Zaire— are generally satisfied 
with the performance of the 
export quota scheme under 
which they are limiting total 
exports to 96,000 tonnes for the 

year from last March. 

The scheme helped to reduce 
the stockpile of tin overhang- 
ing the market from 85,000 
tonnes two years ago to about 
55.000 tonnes last month. 

Some sectors of the Malay- 
sian tin industry are lobbying 
for Kuala Lumpur to opt out 
of the scheme, but the Malay- 
sian Government is against 
such a move as it feels a free- 
for-all would depress prices. 

Dr Lim Keng Yaik, the 
Malaysian Primary Industry 
Minister, is expected to take 
over the ATPC chairmanship 
from Dr Subroto of Indonesia 
at the coming meeting. 

The ATPC will also discuss a 
proposal to increase its budget 
by £lm to £2.5m to enable its 
London-based International Tin 
Research Institute to conduct 
more research and development 

8 African ami mines 
suffer fresh blow 


SOUTH AFRICAN coal expor- 
ters, still dusting themselves 
down after the three-week 
strike by the National Union 
of Mineworkers, have now been 
dealt a blow which is potenti- 
ally much more damag in g . 

The state - owned Sooth 
African Transport Authority 
(SATS) has suddenly and 
unilaterally raised the rail 
rates for carrying coal to 
, Richards Bay, the country's 
exporting port on the Indian 

- The R4 a tonne -rise brings 
haulage rates to R2&50 a tonne 
for carrying coal from the most 
: distant mines to the terminal. 
It is the second rail rate 
increase this year and another 
is expected on April 1 1988. 

These rail rate increases, 
along with higher labour costs 
following the NUM pay settle- 
ment, are among a series of 
costs increases which have 
steadily eroded South Africa’s 
position as the world’s lowest- 
cost producer. The rand has 
recovered from a low of lust 
36 US cents in December 1985 
to 49 cents now; the recent 
NUM award has put another 5 
per cent on costs and inflation 
is running at 16 per cent AH 
this comes on top of a boycott 
of South African coal In 

France, Scandinavia and the US. 

The result has been a swift 
reversal in the growth of coal 
exports. Last year 45.5m 
tonnes were moved — over 40m 
tonnes through Richards Bay — 
but this year the signs, from 
annualised Richards Bay figures 
to the end of August are that 
more than 4m tonnes will be 
lost with many industry leaders 
predicting a far bigger drop. 

While costs have been escalat- 
ing prices have dropped. In 
December 1985, when the rand 
was at its weakest- and rand 
earnings for US dollar deno-! 
minated coal sales at a peak, 
spot prices for South African 
coal were around $38 a tonne, 
delivered into Europe; but last 
week they were almost 10 cents 
below that level. 

In marked contrast to the 
South African industry's treat- 
ment by SATS, the same price 
pressures which are exerting 
themselves on the Australian 
coal industry have seen both 
state and federal governments 
embark on a search of ways of 
reducing rail and port charges. 
In addition, and in spite of the 
week-long strike at the mines 
which ended this week, the 
mining unions have agreed to 
cut bonus payments at a grow- 
ing list of mines. 

Meanwhile Mr Syed Jab bar 
Shahabudin, chief executive of 
the Kuala Lumpur Commodities 
Exchange, has denied local 
media reports that the exchange 
has postponed tin futures trad- 
ing to November. 

He said tin trading would 
definitely begin in October as 
planned, and the exact date ; 
would be announced by Dr Lim I 
when he opens a tin trading 
seminar on September 30. 

The seminar is to take advan- 
tage of the ATPC meeting to i 
familiarise foreign tin pro- 
ducers with the new hedging 
facility on the KLCE. 

Physical tin was traded at 
16JZ ringgits a kg (£4^14 a 
tonne) in the Kuala Lumpur 
tin market yesterday, down one 
cent. But traders say demand . 
has been strong in recent 
weeks, and expect the 17 ring- 
git market to be broken soon. 

Bad weather 
may cut EC 
sugar exports 

By David Blackwell 

EXPORTS OF sugar from the 
European Community in 1087- 
19S8 could fall to the lowest 
level this decade, according to 
C. Czamikow, the London trade 

In its September review the 
broker puts the EC's potential 
exportable surplus of sugar in 
excess of 4m tonnes, compared 
with the 5.1m tonnes it was 
forecasting in July. But 
depending on market prices, it 
la likeLythat . about half the 
surplus will be rolled over Into 
the 1988/89 crop year, leaving 
only 2m tonnes for export 
Czamikow is expecting the 
total EC white sugar output to 
be about 12.62m tonnes this 
year, compared with a July 
forecast of 13.42m tonnes. The 
forecast has been revised down- 
wards because of bad weather 
hitting European sugar beet 
crops in the past couple of 

• British Sugar has cancelled 
the National Sugar Beet Demon- 
stration scheduled for Novem- 
ber 4 and 5 because of the 
possible risk of contamination 
of crops with the rhizo mania 
virus, discovered on a Suffolk 
farm last month. 



COPPER PRICES on the Lon- 
don Metal Exchange reached 
the highest levels for several 
weeks yesterday as the cash 
Grade A position dosed with 
a net gain of £29J»0 at £1*122 
a tonne. News of a tentative 
labour agreement at Ford 
Motor Company's US opera- 
tions aided the established 
bull trend, dealers said. They 
also noted substantial physical 
demand from the Far East, 
stop-loss buying, buying w 
behalf of commodity funds 
and some covering against 
potential options declarations. 
The aluminium market also 
came back to life after a 
couple of relatively quiet days. 
Prices moved through a 
doU&rtoased resistance area 
early on, prompting a wave of 
fresh baying and covering 
against short sales which saw 
the cash standard quotation 
dose £28 higher at £1,958 a 
tonne. The only LME base 
metal to lose ground was zinc, 
with the cash quotation end- 
ing £&25 down at £450 a tonne. 
Dealers said that there was 
little to encourage buying of 
zinc now that the Cominco 
strike was over and talks 
about rationalising European 
production of the metal had 

LME prices supplied by 
Amalgamated Metal Trading. 


OB.T& 1 Unofficial +or • tUgtULuw 
purity i olosa (p-mj — , 

S par tonne 

Cart 1770-80 +45 i — 

3 mortfhaj 1780150 1+31 j 17X5/1718 

Official doling (aim) : Cash 1740-5 
(1735-45), Hum months 1710-5 (5895- 
1705). iBtdaaont 1745 (1745). Final 
Kerb doss : 172030. Ring tonow : 
2250 tonnes. 

88.6* i £ par ; 

parity | tonne i 

Cash -j 1057-9 (-<-28 — 

3 months 1019-30 1+18 1025/1014 

Official dosing (am) : Cash 1035-7 
(1031-3), thiM months 1022.2L6 (1001- 
2). SBOtametit 1057 (1033). Final 
Kerb ciosa : 1023-4. Ring turnover : 
21775 tonnes. 



45pEl?Sep£ T6 MTt agoYaarago 
1664,2 -1654.7 167848 ■ iaO S.4a 
(Bno: SasttRlbvr 28 1S31»KXJ1 


Dow < sept. s5tT WSTyE? 
jopes 15 1 15 ago ! ago 

Spot 128.91 128.21 — 122.88 

Fat 151.02 130.80- — 43 S-29 

~( 3 ssk DecarafiifSI 1331 * 100 } 


Sept. 17 -J- or Month 
1987 — ago 

Aluminium . f 

Free Market 8ir»?S5 $1830^71 

Copper.. — 1 j 

Cash Grade A — £1122 +24.5 £1079.5 

3 month* £2307.5 +30 C10674B 

Gold Troyes 34605 -+2 £466.76 

Lead cart £392 :+4-8 £401.5 

3 months £574.5 !+5JSi363-70 

Nickel ‘ 

Free MkL. ttMSfc +8 -237ftS7c 

Palladium oz — *137 JIB ’+0JS813S.6O 

Platinum OZ 5883.7S -+1.5 .1598-50 

OwckJtHwin . — 5303/520, ..'S258.-M 

Silver troy oz. -~.-4Sa.fi5p — 6.70 480.00p 
3 month* 468. 10p !~SJ&4S2JOp 

traaiiiaZZZZ£Omns4~S £4790,23! 

Tungsten -953.47 ^ -I53.6B 

Wolfram 2XSb_.S4a.-S7 LT-Jms/bo 

Zinc £450 L-3J&JJ4S5 

3 months - £454.75 ‘—45 :fi435_a 

pro ducers —'8860 JSB60 

OILS ~ ‘ 

Coconut mOifRI w. , 8500 

Palm Malayan 183352 j — 3320 

Seeds | i 

Copra fPhft? 1313 ZlTta4u~ 

Soyabean OJM 5153 { +2 1 5140 


Barley Fut. Nov. £102.10 .—O.66£30l~3b 

Maize £15000 f £152.00 

Wheat Fut. Nov.Xl 05^25 1— OJsj£103JKJ 
No. 2 Hard Vflnt^ t I ft 



EARLY FUND short-covering 
coupled with light bask buy' 
Lag steadied gold before com- 
mission house selling 
emerged at the highs in an 
otherwise quietly traded ses- 
sion, reports Dretel Burnham 
Lambert. Silver moved higher 
on trade and local buying but 
the funds were noted sellers 
at the highs. Copper finned 
on fund buying, especially 
towards the dose, and new 
contract highs were again 
reached as stops were elected. 
Trade selling eased crude oil 
before local and commission 
house buying helped . prices 
recover slightly before locals 
Uquhlated long positions. 
Coffee rallied on commission 
house, local and stoploss buy- 
ing. Cocoa Initially eased on 
speculative selling. but 
recovered on trade and local 
buying. Sugar rallied sharply 
on speculative, scattered 
trade and stop-loss buying. 
Cotton tended to consolidate 
as the market assessed recent 
f undam ental news. The meats 
were easier across the board, 
cattle on continued commis- 
sion house liquidation, the 
hogs and belles on weaker 
cash prices. The grains were 
thinly traded. Commission 
bouse and commercial baying 
firmed soyabeans and meal, 
while soyabean oil was steady 
on reports of expanded export 
business. Commission house 
and commercial buying was 
noted in maize 



• Cto*> ' • ftw »H*r Low 

Oct 76 ns 76 JB 77.50 7650 

Dae 74.78 75JB 78 JB 74.06 

Man* 75.75 78.92 . 77.50 75.50 

May 76.85 77.35 77 JO 7550 

July 75.80 77.03 77 JO 75X0 

OCt «.BS 70.33 70.90 «9.« 

Dm 6630 68.08 88.50 86J0 

' PRANCE JUICE 15.000 Bw, earti/lb 

^ Close PraV High Low 

Sept 137.15 139.10 139 JO 136.50 

Nov 130.80 131 JO 131.40 -130.00 

Jan 128.30 121-55 128.60 127.75 

March 1284# 128.85 1294# 128.50 

May 129.35 123.05 12925 129.10 

July 129-56 129.2S 1294# 129.46 

Sept 129.95 123.56 — 128.00 

PLATINUM 50 troy oz. S/t 
Cion - PW f 
Oct MO 4} 504-4 H 

Jan SK.7 SB2.1 t* 

April 806.9 000.2 « 

July 0164 608.4 SI 

Oct 08341 616b 


5.000 troy PT. cemt/OTW o z 
CIsm Piw V 
Sept 757-5 746.0 7t 

S/tony Oz 
Kgb- Low 

353.0 563.0 

601.0 991.6 

6074) 6004) 

6144) 610,2 



— - 



























- — 



"11 " 

Bre, cents /lb 
































— — 


LIVE CATTLE 40.0001b*. canU/ltun 


Coffee Ft. Nov #1309 1+0.6 £1271.6 
Cotton A me.* 03-SOc 1+ 154 187.20c 
Gaa Oil . Hov. .8257485 f— 0.73 8167.26 
Rubber <1cUo) 

Sugar dm) 

Wodtcpa 64* 4BCp 

t Unquoted, t Far 75-lb Sasic. c Cants 
a Bound. * Cotton outlook, v Oct. 
x Aufl-Sept. w Oct- Nov. o Sspt-OcL 
y Nate. 2 Dbg. 


Silver was fixed e.7p an ounce 
tower far soot da) ivory in the London 
builiOB market yesterday at 456.6Sp. 

US cast eqm'vafoms of die fixing levels 
ware: soot 750.3c. down 11.2c; three- 
month 768 Ac. down 11.15c; six-month 
TBIJBSp. dawn 10.1c; and 12-month i 
81543c. down 10c. The metal opened ( 
n 458-439** (753V755**:) and doted I Dec 
at 459V461P (767-759C). * 

1904 1923 1900 
1924 .1938 1922 

Hlab Low 
112.60 111-86 
116X0 1134)0 
1194& 117.40 
120.4ft _ 118.90 
122-90 120.40 


54)00 bu mbu cents /’SKb-bushef 

July 196.2 186.2 196.6 

Sept 184-4 193-2 194.4 193 

Deo 196.4 198-0 196.4 197 

PORK BELLIES 38.000 Ebs. carrta/Tb* 


Unofficial + or 
doso (pjru) — HlgMLcw 
£ par ton ns 

Cart 591-3 I +4J5 8971396 
5 Months 874-E | +3.76 381(873 

Official closing (am) : 395.5-6 

(388-9), three months 377.5-8 (32D-1). 
sanfament 396 (389). Final Kerb 
close ; 373-5. Ring turnover 8450 
tonnas. US Spot : 42 cents par pound. 

festerdaJ + or BurtMss 
olosa I • *■ done 


Unofficial + or 
olosa (p.m .1 — 
£ per tonne 


sopt— — rms-i28«+s.o uaeo-iaro 

Nov jl 308-13 IM+O.B 1314-1300 

Jan [1533-1 586 [—2.0 1839-1327 

Mar 1 1552-15551 — 1366-1847 

May. ;1369-t57aj-14S 1378-1366 

July 1 1388-1801 + 045 1390-1586 

Sept— .~-i 1408-14 15) + tL5 — 

Salas: 1.485 (2^70) lots of 5 tonnes. 
ICO in di ca tor priesa (US cants per 
pound) for September 16: Comp daily 
1979 104. T 5 004.18); 16-day average 
105.63 (106.51). 


42.000 US gulona, 3/bamte 

19450 19.73 19.72 

19-23 19.39 . 19.38 

19.06 . 1830 * 19 21 
18.6T. 19.11'. • 19.14 
19.02 ■ 19.66 19.10 

19.00' 19JS2 1 194X1 
18 JB ■'16.69 194J6 : 

18X6 18-96 ' 19.03 

WJ» 18J4 19.00 

18.97 16.92 18417 

GOLD 100 trey oz, S/troy oz 

SOYABEAN MEAL 100 torn. 5/ten 










. 770.8. 




' 168.6 - 























lb, cants/lbs 



3 months 

5885-60 I +40 3278 

5296-9 | +34.6 1332613286 

Australia probes grain handlers 

Official closing (am) : Cash 3278-80 
(3240-6). three months 328860 (3239- 
40), settlement 3280 (3246), final Kerb 
cloaa ; 3286-80. Ring turnover 1284 


In relatively thin trading conditions 
the market made the opening due of 
£5 lower before steadying. However, 
towards the clou die market used 
to finish nur the day's Iowa. Both 
origins and manufacturers remain ad 
withdrawn from the market, reports 
Gill and Duffus. 

THE NEED for a radical over- 
haul of Australia’s grain 
storage, handling and transport 
system is likely to be stressed 
in a Royal Commisssion discus- 
sion paper to be published next 
week. The Commisssion has 
been working for almost a year 
and its long-awaited paper will 
detail some of the preliminary 
findings gleaned from the hun- 
dreds of written submissions 
and numerous oral presenta- 
tions made at public hearings 
around the country. 

Next week Mr Jim McColl, 
the Commissioner, begins a trip 
to the Middle East Europe and 
North and South America. 

In recent months the Com- 
mission has published some of 
its initial thoughts, and the 
discussion paper is likely to 
repeat its controversial com- 
ments suggesting that the in- 
stitutional framework and 
pricing practices now in place 
of wheat and other grains are 
in need of far-reaching changes. 

As if that were not enough, a 
second spotlight is being trained 
on the wheat Industry by the 
Industries Assistance Com- 
mission (IAC), the Govern- 
ment's advisory body on assis- 
tance given to primary, 
secondary and tertiary 

The IAC is busily examining 
not only the assistance which 
the Australian wheat industry 
receives but also the domestic 
and export marketing arrange- 
ments which it operates. The 
existing scheme expires next 
June, and the Government must 
decide whether to extend or 
change it. 

Both the IAC and the Royal 
Commission are due to report 
early in 1988. Their findings 
will be Important because the 
outlook for wheat — Australia's 
third largest export earner, be- 
hind coal and wool— is far from 

According to the Govern- 
ment's Bureau of Agricultural 
Economics, Australian wheat 
output will fall below 14m 
tonnes over the next few years 
from the record 22m tonnes of 

1988-84, while exports will sink 
to between 11m and 12m tonnes. 
At the same time low wheat 

S lices— the result of declining 
□port demand and US and EC 
support policies — are likely to 
persist in the medium term. 
That means intensifying pres- 
sure on Australian wheat farms, 
whose incomes are already 
estimated to average zero. 

The findings will be import- 
ant for a wider reason too. They 
will touch on aspect!? of the 
Australian economy which have 
hitherto escaped the broad 
sweep of the Labour Govern- 
ment's reformist brush. 

One, obviously, is the trans- 

economically cleared by road, 
■Where the volume is above 
160,000 tonnes, it suggests rail 
might he better. 

The Commission, has also 
found that there is a wide diver- 
gence in the cost of the rail 
service. It says the rates a 
particular grain grower pays 
the rad authorities may be sub- 
sidised by other growers, other 
rail traffic or taxpayers gener- 
ally — and In some cases by all 

In the Comnrisaion’s view, 
there must be serious doubt 
whether the regulated rail 
system can be efficient and cost- 
effective. There is, it says. 

5 months 

Chris SherweU on a study 
which may result in a major 
overhaul of cereals services 




port sector, which is still one 
of the country's most heavily 
regulated areas of economic 

The Royal Commission starts 
from the fact that between 1979 
and 1986, the cost of storage, 
handling and transport services 
took a rapidly increasing share 
of the customer’s price — more 
than 19 per cent last year. 

In respect of transport, it has 
looked closely at the lack of 
competition between road and 
rail in the movement of grain 
and at -the costs and pricing of 
these alternatives. 

In its view, protective legisla- 
tion and government policy 
mean there are ‘’significant re- 
strictions” os the use of road 
transport to carry grain from 
local silos to ports in all states. 

As a result the rail transport 
of grain represents a “signifi- 
cant proportion’’ of most state 
rail authorities' business, both 
in terms of tonnage and freight 

Comparing costs of road and 
rail, the Commission has found 
that where branch Lines carry 
less than 50,000 tonnes a year 
the grain might be more 

scope for significant deregula- 

Its initial verdict on pricing 
in Australia’s grain storage 
and handling system is just as 
sobering. Again, it has found a 
range of pricing practices and 
says few of them reflect the 
cost of service provided. 

The bulk handling authorities 
—which, like the rail authori- 
ties, are statutory monopolies 
in some states — aim for full 
cost recovery by generally 
pooling all costs and determin- 
ing as average price per tonne 
fOr the service they provide. 

This charge Is paid by the 
Australian Wheat Board — the 
Institution which compulsorily 
acquires the wheat harvest and 
markets it domestically and 

The board In turn passes the 
handling charges on to growers 
.through a deduction from 
marketing proceeds— adding its 
own marketing costs and, ip 
tiie case of exports, port and 
Shipping costs. 

As with rail freight charges, 
the Commission wonders seri- 
ously whether pooling costs for 
storage and handling adequately 






reflects the relative efficiency 
of different silos and port faci- 

It also asks questions about 1 
revenue pooling. In which pay- : 
meats are made to producers 
which may not fully reflect the 
value of differences in quality 
or of domestic sales as com- 
pared with exports. 

According to the Commission, 
there is “dissatisfaction" with 
the current pricing policies of 
both the transport and the bulk 
handling authorities. 

In its view pooling continues 
not fox reasons of equity, 
grower support or operational 
efficiency, but for administra- 
tive and operational con- 

Moreover, according to some 
submissions it has received, a 
more competitive environment 
could lead to average cost 
savings for all wheat growers 
of up to A$15 (£6.60) a tonne. 

The Commission acknow- 
ledges that existing institutions 
have made efforts to improve 
efficiency by administrative 
means, such as performance 
standards and incentive and 
penalty payments. But it says 
that the types of incentive 
structures found in competitive 
markets are very difficult to 
create through agreements and 
administrative methods, not 
least because the latter may 
not be cost-related and tend to 
be less flexible and less respon- 
sive to change. 

All in all, it clearly favours 
what it calls a “market driven” 
approach, in which there are 
cost-related price signals flow- 
ing in the system, rather than 
a “service driven” approach, in 
which a predetermined level of 
service dictates the level and 
disposition of resources. 

The details are still to be j New aov. sioau-iosu 
spelled out. The Commission's * sov^-aiooM-iosii 
report at the end of this month 
will give some views on the 
sort of system. 

How such a system might be 
put into effect will only emerge 
after further hearings and ana- 
lysis. A final report is not 
scheduled to be published until 
well into next year. 

PmMwm I Buzin 
dots don 


| Clan [ Hlgh/Uw ' 

r. tiriTl 

er t 

18: 1 


men pa 
)a(»v e 



'>rd iwEd 







IS— Wt 
1.245. ( 







^666 (5.72); 15-day 

News of a Soviet purchase of 300,000 
retinas of soya meal pushed prices 
nigher Burly on. Good two-way cam. 

>4-369 U) 

+0.B6 reports Muirp&es. 

er l 8 

Financial Times Friday September 18 1987 

gs $ 3 
8 s ji 


£$ Si 

gg M 

§3 §3 §3 5: 


fis» s' Si 

• -,{ %j i 

■£cg ffl ) 

'<^1 *4 * 

iKi |s Sj 

<■>2 7 2 ?J W J 

sa& £sa $»* 

• 3-LD^>* t 

’1 Cf n>_ _ 1 


!to £ 

55 !!■■ 
’S S = 

* » •5 s 

ss Eg s# 

?S *» &i 
r s p 5 ft| j 
*a {,5 o» 

^*2 g! 

5 = 4? ?*: 

“ ?! "» (a 

>;<■? w: is 

Z5e 1 a; 
> i jf! 
;« : 


' ••: ..Stef 

i- ■■: -■ kfr;i«- 

:•’ ! .’r - rli-ifi ST 

, - -- ■ -.i_; > . 

’ ' 5 "L-R ***?* 

• D ■' 

" . ■ I •* .■■*■'£ 


'4 '' 6 Vf 

*#f ' .•■<*• 


Company Notice 

[ *] :< 3 [« e ■ 3 (fc : 

Pound firm but cautious 


Sterling showed a favourable 
bat restrained response to farther 
encouraging -economic date. 
Investors seemed determined to 
watt Cor today's bank lending and 

money supply figures before mak- 
ing any decision- Even IP these are 
satisfactory, sterlings recent 
strength has been sufficient to 
arouse fear* of central fa»nfr 

Sterling opened at around 
DU 2L99 which was a little too 
close to the DM 3.00 level 
regarded as a trigger point for 
Bank of England intervention. 
Consequently there was some 
hesitation to try and push beyond 

today's bank lending figures prove 
to be favourable, then demand for 
sterling eould provide the Bank 
with a trial of strength. 

Yesterday's economic dy*» 
showed that UK unemployment 
fell by a record amount for August 
to Z83m or 10.2 per cent while the 
second quarter current account 
deficit was calculated at lust . 
£17410, helped by an upward revi- i 
sion in invisibles. In addition, unit 
labour costs rose much in line 
with expectations to a year on 
year rise of L7 per cent while toe i 
underlying increase in average 
earnings remained static at 7.75 
per cent 

Today's money supply figures 
could provide the key to whether 
sterling will remain -within its 
recent trading range (regarded by 
some as a shadow range of foil 
EMS membership) or whether the 
Bank of England will have to flex 
its muscles and defend the 
DM 3.00 level with conviction. 

Tb pound's exchange rate index 
finished at 712, unchanged from 
toe opening but sp from Wednes- 
day night's close of 73J. 

Sterling finished at$LB465 from 
9L6455 ' and was unchanged 
against the D-Mark and Swiss 
franc at DM £9875 and SFr 2.4773 
respectively. Against toe yen it 
fell to Y236L0 from Y237A0 but 
finished higher against the 
French franc at FFr 9.37 from 

FFt£l9& The dollar showed little 
overall change an balance. Trad- 
ers appeared to be ingrained with 

a bearish attitude caused by the 
lack of progress In narrowing the 
US trade deficit. Nerves were 

return of Congress heralded the 
start of active discussion over 
attempts to reduce toe US budget 

The dollar finished at DU L8150 
from DU ISIS and Y14&35 com- 
pared with Y 14435. Elsewhere it 
was unchanged at SFr L5055 and 
slightly firmer against the French 
franc at FFr &0S50 from FFr 
6.0525, On Bank of England 
figures, the dollar's exchange rate 
index fell to 100.9 from 1QLA 

D4UBK- Trading range 

against toe dollar in 1887 is USAS 


to Uttt. August average LSS73. 
Exchange rate index 14U against 
dx months iff. 

There waa no intervention by 
the Bundesbank at yesterday’s fix- 
ing in Frankfort when the dollar 
was fixed at DU L8174 against DU 
1B123 on Wednesday. 

Dollar trading was confined to a 
narrow range in the absence of 
any fresh incentive. Next week’s 

meeting of central bankers was 
tending to postpone a natural 
desire to push the dollar lower. 
While there appeared to be little 
hope of any fresh initiative from 
the meeting, speculators were 

and adopt a wait and see attitude. 


range against toe dellar la 1987 Is 
159,45 to 138JK. August average 
14737. Exchange rate Index 2£L9 
against 2113 six months age. 

Trading was dull and feature- 
less in Tokyo. There was insuffi- 
cient incentive to make any 
serious attempt at pushing the 
dollar outaide its recent trading 
range and the US unit finished at 
Y143A0, unchanged from 

0 ■ > T~vt m > • m&sm 



Floating Rate Subordinated Notes 1996 
In accordance with the provisions of the notes Notice is Hereby 
Given that for the period 18 September to 18 December 1937 notes 
will carry a rate of interest of 712 per cent per annum with a coupon 
amount of US$200.64. 

Chemical Bank as Agent 

r . . t i 1 A 

SW« Cate-Ua Pas-Lnt 
PriM Dec Mat* me Math 

108 7A0 8JB 014 050 

110 535 Mb 03) 04 

U2 U4 m OSZ LS3 

114 ZS 4JJ8 127 240 

1U La U7 23 330' 

Ui 1M U8 M2 UO 

120 038 WO 512 648 

122 019 108 *57 7.40 

El BWn d votes' total. Cm SjWM Pots J.9B5 
Prate dWY open toe (Mb 2W10 Pie 14,705 

Strike CWs-Lat Pms-Lju 
P te Ok Mac* Dk Mac* 

78 SOI 450 0.41 L18 

80 337 353 L13 101 

82 2k 232 lit LOO 

84 113 1A5 253 403 

to 057 LOT 433 559 

88 058 045 55B 753 

SO 008 027 748 EL59 

92 003 0.1b 943 10.48 

fltteM volant total Cafc 147 PoS 171 

Ante mys epee iot: CaBs 718 Pots 541 

upTt rr«c mo r 
S trike cab- 

Price Set 
22750 3.78 

23000 258 

TWO 133 
23500 058 

23750 051 

24000 013 

24250 005 

24500 002 

Prate Sty's open i 


JU Pio4jM 

OU. Sept. Oct 

954 258 234 

856 ZA 356 

656 193 406 

» 5M 535 

452 7.912 6.72 

327 1023 8279 

249 1265 9.995 

156 1552 1 1-86 

C tofl 17 Pots 38 
e CMb 490 Pas 288 

BetabnFrnc — 
DifWsh Ktene_ 
Oermao D-SOatk . 

French Franc 

Dutch Guilder — 

Iris* And 


Currency %chage 

Ecv, amounts from 

e*mm esatast Ecu central 

r«tts Set* 17 ran 

«2£582 4 35897 +159 

7.99306 +150 

20SK3 2OT64* +057 

6.90403 6.92440 +050 

251943 253658 +0.74 

0568411 U 774165 +075 

1^8358 159957 +L05 

Ol v Biycnc i 
Oak % 
± 1.0961 
± 45752 


Changes are for Ccaw th ertfcre positive changa Oenotas a weak omney. 
Acauanient caknted W Financial Times. 




Pi ^ 

06706 06710 06685 06697 
06770 06772 06749 06759 
06840 06840 — 06832 

r~* f '■ 


(formally Toya Rayon 
K&ushiki Kaisha) 

Unkad IGngdom shareholders are 
aArised ihai copies of the Annual 
Report tar the year ended 3 1st 
■Manta. 1987 are now available 

S. a Warburg & Co. Ltd. 

Paying Agency, 6th Floor, 

1 Hrabury Avenue, 
London EC2M 2PA 


a?74 ISSUE) 

lhecMpan tan 1st Octcba 1987 may be presetted 
for Daymens at 5ANC9, 60, 
Londn wag, LwdM EC2P 2J^ between die been 
of lOiuo. aad 2 pun. 


M± Sertember, 1987. 


NOTICE IS HERESY GIVEN that tbe Transfer 
Reiter wU be doted ham 12th October to 30tb 
Odcher 1987, both dates Inctete. 


Hegh lf ’ s Oenarinecc 
29 Gresham Street, 

Leaden EC2V 7HN 

At a meeting of the Board of Directors held 
today, a quarterly dividend of fifteen cents 
(25 cents) Candlan per share on the 
nutn a nrti ag 0 rtfinary Shares was declared, 

payable « October 28, 1967 to ladders of 

record at the dose of business oa September 

By order of the Board 
O. J. Oeegan 

Vice Protect and Secretary 
Montreal, September 14, 1987. 



Per artunm 
line art 

(mm. frmn. 

3 tints} 3 aas) 
t £ 

Appointments 1250 4350 

Commercial and 

{PuMIc Power Coronation) 

ECU D attmiMlfd Fhafeg fate Kota dm 


Metier b b e n dy given (bat for the kxerea 
period cemraendoB « 21st September 1987 
tbe Notes wHIbaar Interest at the rata of 7^% 
per annum. Tbe Interest payable on 21st 
December 1987 against coupon No. 5 wfU be 
ECU 192743 per ECU IttO rate 

fiscal Agent 

Legal Notice 

! II 1 „„ 

— — — 78-11 

— — — 77-25 

— — — 77-09 Dec. 

— — — 7626 Mar. 

— — — 76-12 JuK 


Saturday p 

Easiness for 

1250 4150 

6.00 25.00 

950 3250 

Ctae Wsfe 
05557 06562 06545 05557 
05606 05606 05591 05604 





























Sale/Wanted 1250 4150 

Personal 950 3250 

Motor Cars, Travel 950 3250 

Contracts, Tenders 1250 4150 

Book Page — 2250 

Panel — 3050 

PrwnlBni p ositfgnt aaaMalile 
£9 per Single Cokuna cm extra (Min 30 ansi 
All prices cxdpde VAT 
For hirther details write to: 

, Classified Advertisement Manager 



No5Q3750 of 1987 
In the Higb Conn of .hatter 
Chancery Division 

la tie Matter of 

fit the Matter af 

was, on the 23rd July 1987, p ese we d to Her 
Majesty's High Court of Justice for the 
conn mutton el the cancellation of die Stem 
Premium Account of tbe above-named 

AND NOTICE is farther given that tbe said 
petition h.dfccaed to be beam before tbe 
Honourable Mr Justice Peter GRaun at the 
Royal Courts of Justice, Stmt London, WC2A 
2LL on Monday (he 5th djy of October 1987. i 
Any creditor or Contributory of the said 
Company desiring to oppose tbe mtithiq of an 
Order for the confirmation of tbe said 
cancedation of the Shwe Piem ha n account 
should appear at the time of bearing la person 
or By Counsel far that purpose. 

A copy N the saM Petition MB be rumb hed to 
any such person requiring tbe ante by tbe 
tedertnemloned Solldun on payment of die 
regained charge far tbe same. 

Clifford Chance 
BtekMan House 
19 New Bridge Sweet 
London EC4V 68Y 
Ref: RWC 

SoUckon tar the ahone-oamed Co m pa ny 
Dated Ms I Oth day of August 1987 


NOTICE TS HEREBY GIVEN, pursuant tn section 
48(21 of the I ns olvency Ad 1966, that a meeting of 
the mtsecoredcredtars of the above-named company 
will be held at The Griffin, 10 Cbamb RowL 
Pnvuduin. Rmdkig at 10J0 am on 2nd October 
19B7 far the popose of tevtag laM before It a copy 
of use report prepared by the AdmMstratiN 
Receiver safer section 48 of the said Act ml V 
thought fa. appointing a caamfuee. 

Ctednn are ndy entitled to vote ft 
(a> they haee deBvcred u> me at the address shown 
below, no later than 1250 henrs oo 1st October 
1987, written details of the debts ihqr <tei to 
be Am to them fram the ampaoy, and their 
date haw been duly adm itt ed onder the 
provisions of Rule 311 d the fau o te aw fades 
1966; and 

(b) tee has been lodged whb me any Pmy xhirii 
l he credtor kneads to be used on Ms better. 

J. NL Ireddc, 
AMdsttew Receiver, 
Cork GoHy, 
Phoenix House, 
1 Station HHL 
Rewfiag, RG1 1UN. 

Dated: 8 September 1987 



31455 316JO 3H74 31340 
31320 31560 31240 31630 
315.70 31835 31515 31950 
31950A 3 21 50 31750 32350 

FT 30 


Reuters Code: ION. IGfO 

FTSE 100 

iept 2302/9 +34 
Dae 2347/54 +34 

Sept 2540/48 +19 

Dec 2564/74 +19 



The faMe below aim the rates of exchage for toe US. dote against varions currencies as off Wedaesdav. September 16, 1987. The exchange rates Dslcd 
an raMdle rates between feqrmf aadseDog rates as «Mfedhetweea hanks, usless othenme foticatat. Aflconwides are quoted in foreton carrenev oatts 
per mw UideHar except ncertahisuecifietf ares. AO rates qiwM are mdicalive. they are not based on. and are out nteuded to be used as a hash tar. 
paificotar transactfoas. 

Bank of America NT & SA daes not aadertake to trade ■ all toted tareipB currencies, aad aeitfaer Bank of Aaierica NT & SA nor the Financial Times 

p rii pnh , pma dhtit 

Bank of Ame rica NT & SA daes not andertake to trade ■ aU B 
assume respsnsfeffity for errors. 

Bank of America Global Trading, London, 

' New York, Tokyo, San Francisco, Los Angeles, Toronto. 
24-hours a day trading capability. 

Enquiries: 01-634 4360/5. Dealing: 01-236 9661. 

ECU=5US1J4555 SDR1=$US1290% 

As of September 16, at IIjOO a.m. 

3 months 6 months 
Eurodollar Libor: 7fi ffU 

Sibor 7 % Si 

It’j • 


Better tone 

PapnNewGnlMa Kbn 

/Gnanof (0> 

Paraguay — \ Guarani (p) 

l Guarani (d) 

flat! (o) (n) 

p«rw tlnO (o 

PUlfaidoes Paw 

PHctetn Islwute NZ Dollar 

Poland ZMy (o) 

Portugal Exc ud a 

Puerto Rico U5. 5 




Balearic Idaads 

250 IReaaicnldatiela. 

75045 1 Rnmanta 

47585 ~ 

SENTIMENT ON toe London 
money market was slightly better 
yesterday, after encouraging UK 
economic news so for. this week. 
Wednesday's . .news of half the 
expected Public Sector Borrowing 
Requirement tor August, and 
about doable tbe rate forecast for 
July industrial production set the 

The market is in toe middle of a 
concentration of figures, but has 
not yet been disappointed. Tbe 
toll of 43^00 in August unemploy- 
ment, with the underlying rise in 
July average remaining 

UK clearing bank base 
lending rate 19 per cent 
since Angnrt 7 

at 7.75 per bent, while unit wage 
costs rose at an annual L7 per 
cent, compared with L2 per cent- 
in June, were in line with with 
expectations. . . 

Dealers noted that the median 
forecast for today’s August bank 
lending is £2.5bn r according to a 
suiwyby Money Market Services, 
compared with recent estimates 
of around £2.75bn, and the .pub- 
lished figure of £L0ba In July. 
This suggests that nnless there is a 
substantial improvement' In 
recent figures the market wfll be 

Three-month interbank eased 
slight! to IGA-IO per cent from 
10Vh-10 per cent yraterday. .. 

The Rank of England initially 
forecast a money market shortage 
of£250m, but revised thiato£200m . 
at noon and provided total assist- 

ance of £l82in. 

Before lunch the authorities 
bought £30m bank bills in band 1 
at 934 per cent In tbe afternoon 
another bank . bills were- 

purchased in band 1 at 9% per 


Late assis tance of around £80 xk 
was also provided. 

' Bills maturing in official hands, 
repayment of late assistance and a 
tabe-un of Treasury bills drained 
£237m, with a rise In the note 
circulation absorbing SSQm, and 
bank balances below target £29m. 
These outweighed Exchequer 
transactions adding £85m. to 

to Frankfort call money eased 
to 5L65 per cent from 3.70 percent 
as the drain from montUy- tax pay- 
ments caused no liquidity prob- 
lems for the banking system. Com-g 
mercial frf’k* h eld DM56.4hn at. 
the Bundesbank on Tuesday, com- 
pared with DM53£bn on MondsyJ 
The daily average for toe first 15 
days of September was UHSaSbnj 
well above the ejected minimum 
to be set by toe Bundesbank for 
the whole month of about fSLSbn. 

In its September raonfidy report 
the Bundesbank tended to play 
down toe implications or above 
target growth in toe central banka 
money supply stock, but wanted 
that monetary expansion was still 
above the medium term growth 
potential of toe economy. 

The Bundesbank said money 
stock growth of 7.4 per cent in July 
and August, was set against a 
target range of 3 per cent to 6 per 

Tfca (Hog rates arv tte ariW**tic man* mtead to ite aaaren oaa+WecntiL o 
o ffe re d n te far XIOtnquotetitef ttie nwfcat to ffa tra fe rea ^ bate at 1150 xm-eadi 
Tfea toads an National Waxtadartar Bank Bank of TolQ^ DaotfdM Batev Banque 
Puri* and Morgan Gaaratey Tran. 


NEW YORK literary BBs aad Bonds 

f| ■arilliniil o»— «* 565 lkwrar 

WI— TVwmtii 60S Ftorjra 

Pitete 8k T haara te ■ 655 Rvcjcar 

■wterfcag te -Hr8k SfcrpBnto 750 Sovyar — 

Rd-fandi 6% OWte 7 39 lOjear 

MtekMUerwxte — 7X, Twc jar . 831 30 jar — ■ 

~ "scpiatocr 17 I OJHnlgtt I .£L j ^5. I iS^L" Hands I 

Qw—to 565 Tfaeejaar 

Tto—8 616 Tarta r 

. 8V Tlmwte bSS R Wgra 

SfaSk Stxmrtk 750 Stmajtar 

. 65, tejnar 739 10 year 

7X» Twcjar 831 Xjar — 

n M ||dnt* fox too ' TTiree Sfa 

^ Mnott Itate Mato Montis 

360-570 350-3.95 3503.95 386-450 485-440 

ta sa ^ 

Imls — — 

11V124, 22V-12k — lZb-13 — 

710 6VW ? — fcVfcS — 

8«* 9A-9S WrWi WrWb 9V10 


Buraw __ 

Cawaw uaRpL 

■Canary Islands __ 
Capa Vardc (stands. 
Cayman btands — - 
: Canute Africa Rep. . 


Congo Ptepfafa Retx. of . 

. Costa ftica 

Cota tin voire 



Local Auti/ritytapL. 
Local AMbsrity Bands . 
Conjany Deptota — 
TNmBBb(Bwl — 










— * 
















■ — 






' _ 









lO^-lffi, Utt-10b 


va - 

10 li — 

850*7.95 BL60A55 

DtMrCDs — — 750-7.45 760-735 850-7.95 860855 

SDR tinted Dqxrdft - — — «-6i 6A-6& 7&-7h 

ECU LtateJ De n os H i — — 7^-7^ 7A-7& 7k-7h 7V7k 

Traaury BIBs toeHJ; oae-monto.^ par era; tora+no(Kl»9S per rati; Bank BUs (sefO: one- 
■aatii 9fi per cent; tint mentte per cent; Trewuy BWs; Average tender rata of discount 
9.7348 px. ECCD Ftoed ton Staffing Eapatt Ftagaee. Make IIP August 28, 19B7. Agraad rate 
for period Scpumbar 23 to 0ctoUr25 19B7, Scheme I: LL24 Seheraes II 4 HI: LL31 px. 
Referam rate fur pCtMApomltt Augpaia^ 19B7, Sdicipa m 10.037px. LoraAatiHrtaraod 
Fiance Houses seven days' notice, etfun seven dajs 1 flxati. Flaance Howes Base Ran 10 per cetx 
from Septeraber L 1967: Batee Deposit Rata, for sms as wuaa daps' notice 3-% per cent. 
Certlflcmes of TaaOretoK (Series 6); Dq»slt £100000 and aver held malar ana moan B per um: 
one+faw months 8»i, per era; three-5lxTBenths 10 per cent; sta+toe months 10»4 per cent; olne-12 
mantis 10k P*r C*M: UPder £100,000 B per cm from September 1% Deposits akhdram far cash 
5 per cent. 


Dfoonti Rep. of 





Faeroe Isiaotis - 

FakUnd briaads 




French (Twin Africa _ 

French Cutana 

French Padfk Islands , 

GanRila T... ~ 

Germany (EasO 
Germany West) 


/Boliviano Co) 
l Boliviano (O 
Pa la 

Cruzado to) 



CJJL Franc 



CJA. Franc 
CSJL Franc 
Peso Co) 
Retmlnbl Yuan 
Pern Co) 

CJ-A. Franc 
(LFJL Franc 

C.FJL Franc 



E. Cartkenn S 

/Sucre «D 
■ iSocre (R 
/Pound Co) 

’ (Pound U) 
fCnlnn Co) 

’ (Colon Cd» 

. C.F-A. Franc 
. Birr (a) 

. Danfab Kroon 
. Pound* 

. OoKarOl 
, Markka 
. Franc 
, tF A Franc 
. Fraac 
, OF.P. Franc 
, CJ A Franc 
. DaU 
. Ota nai k Co) 

. Deutsche Mmfc 
. Cedi 





72405 I 
0539 , 
30200 | 

30200 . 

22451 | 

3022 . 
25253 1 

63.73 ! 


• 0.70 















Ka m puch ea — 

Kenpi — - 


Korea (North) 

Korea (Sooth) ■ 


Laos P'toD Rap. 

Lebanon — — 

Lesotho . — 


LApa - — 


L uae atoourg 

Ma t togasca r Dm. Rp. 

Madeira — 


Mafarsla — 

Htedlve Islands 

Mall Republic — 


Martinique — 



Mttpwlon — 
Monaco ___ 



■um uun ... — 

M t a a nohpm . 

Waiii tstexk ... — - 

Nepal _______ 


Netherlands Aaflles . 

ItigarReptanc — 



Oman Stearate of. 

. Dollar Co) 

. Yea 
. Dinar 
. Riel 
. Shitting 
. Australian Dollar 
. Won 
. Won 
. Dinar 
. Kip 
. Fmmf 
. Maloti 
. Dollar 
. Dinar 
. Swiss Fraac 
. Luxembourg Franc 

. Pataca 
Franc (2) 

. Portuguese Escudo 
. Kwacha 
. Rtagptt 
. Rufiyaa 
. C.FJV. Franc 
. Lira* 

. Franc 
. Oogulya 
. Rupee 
/ Peso OO 

. French Franc 
, French Franc 

. Togrft Co) 

. E. Caribbean $ 

, Dirham 
. Metical 

S. A. Rate 
. AostraHan Dtelar 
, Ropee 
. Gander 
. Dollar 

(Cordoba to) 
l Cordoba (d) 

CSJl Franc 
Naira (d) 






12- 96 






















10-10 , 

2- 902Q ; 
6542 1 

7480 I 

13- 17S 

152750 I 
1523.70 ! 

6.042 ; 

3- 3535 

q ya 

St Christopher.— 

9L Helena 

St Lucia 

St Ptene 

St Vincent 

Samoa (Western) 

Samoa (Am) 

San Marino 

SOa Tom* & Prfadp OK 

5andl Arabia 


Sierra Leone 

Shqapore — 

Sotamon islands 

Somali Repubtic 

South Africa 


Spanish ports la 

North Africa 

Sri Lanka 

Sudan Republic 

Surinam ... 




Syria — — 


Tanzania - 



Tonga Islands 

Trinidad & Tobago 



Turin & Caicos btands _ 

Untied Artel Emirates . 
United Kingdom _____ 






Vkgn (stands (British) , 
Virgin Islands (US) — 


Yemen POR 

Yugadaaria . . i- ■ 

Zaire Rapubffc ...» 



French Fine 
Leu CO 

E. Caribbean S 

E. Caribbean S 
Front* Franc 
E. Caribbean $ 

Italian Lira 



C.FJL. Franc 
Shilling (d> 
/Rand CO 
l Rand Cc) 


Spanbb Peseta 
(Pound (o> 
(Pound (k) 
(Pound (f) 

Pound to) 

Dollar (a) 



C.FJL Franc 





US % 

Australia Dollar 

Now Shi Bing <0 

Pound Sterling* 
Peso Cm) 




f Bftliwr (o) 

< Bolivar to) 
tSofivar W 
Dong (a) 

















































, u. Not ani table. Cm) Market rate *U5- dollars per Kteiunal Currency upR. 

00 Frawarket to) Controlled, (ft FIrandal rate, (g) Prefeentlte rates. 00 N 
products. (0 Priority Rate- to> Essential baports. Cp) Exports. (11 Fiji, 29 Am* 87: 
For fnrtbar teforn a ati oa ptease contact jwr toad brwsh of tot Bar* ot America. 

15. dollars per Ntehwai Carrencyjarit. (a) Partfte Rate. to) Official rate. to) Floating Rato. CO Commercial rata 
rate, (g) Preferential rotes, (h) Noo esserotaJ Inserts. 0) Routing tairta rate, (p Public Transaction Rate, (k) Agrictetml 
?brwtenrfS"Birti5^te*riSL 87:Wtafam,,,,ahl, * Wrt,Ll7 ' 75% ' 01 »tada9a»car, 29 June B7: Franc devalued by approx. 3636. 


8S3 3 5J8 g 



Jointly compiled by the Financial rimes, Goldman, Sachs & Cm and Wood Mackenzie & Co. 
Ltd., in conjunction with the Institute of Actuaries and the Faculty of Actuaries 


Figures in parentheses 
show number of stocks 
per grouping 














1987 1987 ago 

High Low (approx) 

177.98 99.92 

101A2 85i53 

134.89 9619 

141.78 UXUX) 

124.83 9818 

7ZLJBZ 9039 

104.93 84JJ0 

14736 9639 76.99 

145.49 9930 84.94 

11231 8432 103-27 

16138 100.00 9437 

19334 9834 89.79 

42239 99.72 5732 

131-41 9935 98.46 

13831 83.93 7039 

181J7 100.00 20634 

174JZ8 9939 8937 

19839 10030 10335 

165.92 10030 96.49 

13210 9035 97.49 

11030 9231 9357 

16237 9935 9637 

137.42 20030 96.48 

W J rh mt rt Da m — tm m W 
IB UM !M la*m ECS 

Base nines: Dec 31, 1W6 - 100 

Canrfchl Tbe FwancJaJ Times, Cotta* Soda & Co, Wood Mactamfc 6 Co. Ltd. 1967 
September 16 : Medan Uriel dead hr pobSe bond**. 

Sfptenter 17 : Latest Halos prices men- jsnniUMe. 

12038 I 127.42 139.73 10030 I 9531 



507 050 

068 I 1.40 

54 3; 

119 I 6. 

54 UO 

■m 060 

371 090 

54 060 

137 7 JO 
84 850 

145 060 

466 060 

366 420 


443 1050 

113 720 

86 120 
178 420 

35 460 

34 420 

121 260 
18 22QA 
103 850 

10 350 

44 Z50A 
14 1750 

9 1550 

99 220 

197 220 

135 5.406 

133 A90 

3 3 

24 1460 

85 9 

2 250 

34 560 

57 I 360 
SO I 3.40 

111 350 

10 460 


ABM Sat M 


N&cdtataBkLtt 10 

MMrlQ) 10 

Afedlri*BNk_ 10 

taeriaaEtp,Bk ID 

l«M JO 

KfoyAafedter JO 

AHZ Bukins Creep 10 

fendritiClpCarp 10 

JLteKy&CoUd JO 

BandeShw 10 

BakHaaGn 30 

BmkLawKUIO 30 

Barit Credit A Com 10 

BrtriCnm 10 

BakoNntaad 10 

firtriftxfa 10 

BakriStfad 10 

Boqoe Beige Led 10 


BwdnrekTaLM 10 

BmfldriTwilid II 

hfarMK JO 

Brit BkrilW Eat 10 

• BnmSkqdey 10 

SawssMtseTfl 10 

CLBariiNederW — - JO 

CauhPtreanl 10 

ltd ID 


• OvMBBseSMk 20 

GtihritNA 10 

CtyWtndatsBak — 10 

O&a UeBak 20 

Cam. BLN. Eat JO 

CssKforitdCrei 10 

CwpentirtBa* *10 

CffnsPopabrBk 10 

DmonUerie ID 

EqutVl TsLC'p pie 10 

Enter Trust Ltd 10»j 

ns*bdAG«.S« 10 

RntNa.Fk.Cop 11 

RntNri.Sec.Lri 11 

• kfecrtFksaq&Ca— JO 

fatal Frzxr&PK 11 

GUM 10 

bndbgsBiri: 10 

8 Bw—mMidim 10 
KFCTnBtlSftfe— 10 

• ftanfrsfa* 10 

Boitjtlie&GctTst. 10 

• MSawi flO 

CfanACa 10 

HutfngfcStatf— 10 

Ihyfclfr* — . ]0 

Ifc^nf&Smlri 10 

MttandBadi 10 

• llaw&nM— 30 
Moat Cnrit Carp. LkL. 10 


HriBkrfXsut 30 

H ri We dn oata 10 

Notton Badl Ltd 10 

NmattfiotTnaf 10 

PKEembdOW UP] 

PranxaiTnElLri XI 

AfapMASm 10 

faBtorixffnBtee lCP, 

BqriBkriSMtaad 10 

RoyriTnriBi* 10 

Sntth&WBBiaSea-. 10 

SteoMQartmd 10 

TS8 10 

HOT Hartgage Ejqpi fZLl 

IWMBkdKnal 30 

Uatcd Monti Bank 10 

tWyTinstPLC 10 

WesamTnst 10 

WestpxBriLCop— 10 

VMeMyLaUM Iff* 

Vcrtsttee Baric 30 

• Members «f dm Acce pt ing 
Haases Committee. *7-diy 
deposits 5%. Smwise 766 %j 
T ap Ttee-OjatH- a 3 moods' 
min 951%. At afl when 
£10300+ remain dquluiL 
1 Mortgage base rate, f Denari 
deposit 4.96%. Mortgw 105%. 

■sas v* 

3JH ‘ 

V* ' 

m >' 

§ v 




Asset GUI Trost Maps Uri 



F 259 50 

A=Ask B-Bid C-Call P-Put 



m m 


(jn uap txtt M d in Via Ftopuhacai Kara with BroMedBatoaty) 


to due balden of die op Islanding 

VJS. $20,000,000 

3 per ceoL Convertible Bondi due 2001 


(the 'Bonds* and Cm "Company* reapecfivrty) 

On 4th Sept em b er . 1987, the meeting of the Boaxd of Dbeaan of the Company 
ap pr ov ed a free distribution of father shares fat the Company. Tbe record date for 
the dcte mlrwmn of aharrho i dm guided ro receive snefa free dlrmbution will be 
15th October, 1967. The free dtitriburion of the Company's shares will remit in an 
adjustment of the Conversion Price in aocotdanue with the provisions of the Tran 
Deed coneDtadnf the Bowk, 

Notice ta acconhnfliv hereby given eo the holders of dm Bondi drat, ptnuant to the 
provisions of the mid True Deed, the existing oanvenhm price ofW48.663 per 
share trill be adtasred with effect from 16* October 1987 (dm date after the record 
dare), and the new con venton price will then be W44.968 per share. 

18th September 1987 

Yokong li mite d 




The shorter across solutions are 
not clued: they follow a. 
similarly repetxtioe pattern. 


1 Possibly a senior, but d 

junior! (11) 

7 (3) 

9 (5) 

10 Proceeding by part of main 
road without turning (1, 4, 4)- 

11 Bird call before match for 
drinks (9) 

12 (5) 

13 Drunkard gets a drink 
around liner (P & O) (7) 

is (4) 

18 (4) 

Explosive flzm gets tired out 


Seasonal sucker for all if 
poor? (5, 4) 

Chess player at cape finds- 
cattle (54) 



Old-fashioned intimate of 
California and other coun- 
tries (54) 


1 Dearth of craggy rocks over* 
big town? (8) 

2 Reserve suit containing 
volumes (8) 

3 Ethical Tory? (5) 1 

4 Pound, for example: one for 
wise men and holy one (7) 

5 Causes excitement among 
the viviparous especially (?) 

6 High route used for the 
working day? (54) 

7 Language of 1, 2, 3, etc. (B) 

8 Scattered as seed in Macedo- 
nia (6) 

14 Aphetic prefix? tis, for 
example, taming 252 port (9) 

16 Energetic Russian prince 
among French solvers? (8) 

17 Sheets, etc., for inn — be led- 
astray (3-5) 

19 Continue too long with old 

AR Svensk Exportkredit 

(Swedish Expun Credit Cmporuiun) 

U.S. $125,000,000 
Hooting Rate Notes due March 1992 
Far the six months 16th September, 1987 to 16th March, 1988 the 
Notes will cany an interest rare of 10% per annum wirh a coupon 
amount of U.S. $505.56 per U.S. $10,000 Note, payable on 16th 
March, 1988. 


Bankers Trust 
Company, London 

Agent Bank 

copper dish (4, 3) 

20 Angle about zero with a. 
court (7) 

21 Right in space, maybe, over 
three light years (6) 

22 Pearl ottoman conceals- 
cricket writer (6) 

25 Pearl ottoman conceals chil- 
dren’s game (5) 

Solution to Puzzle No. 8,432 

aaaaaa onsaaa 

1 0 a a ana 
□HEjnaaa naamnoa 
0 3 a a id a a 
BanasHasaa naaa 
a n ft an 
anann anaaonna 
a a a a □ 1 
nanaaaan nsaaa 
a a • n 0 s 
aaaa aoaaaaanaa 
a a to a 0 a n 
aaaansa saanaaa. 
n n 0 (3 a pi 

nnanaa sjansaa 

Notice to tbe Bondholders of 

The Mitsui Trust and Banking Company, Limited 

(the “Bank") 

U.S. $100,000,000 
2% per cent Convertible Bonds 2001 

(the “Bonds") 

Arijwtmem of convqaioc prio; to be made a, ■ rexah of a free ghige cfan t fe utta n 

and an bnance of rights to sribrnrUx (br jhana of the Bo4. 

Pmauant m the Tana and Canfitiani of the above mefttioewd Boodt (the 

^OxadltkmOi *e hereby notify Bondholder* as fbUowe 

1. The Baardof Dlrecton aotfaottiedan 7ih Augax, 1987s— 

(1) a free dhtrlbudon erf rimres at tbe ate of three (3) new dunes fcr each one 
handled (in) rintta held at 3.00 p-tn. on 30th September, 1987 Tokyo 
time (die record date). 

(2) an nuance of fights Bombnibe ferriwetar the rate of dm* (3) new rimrea 
for each one hundred (100) fan held at 3-00 p m- on 30di Sepnsnbet. 
1987, Tokyo rime at a c on ririerart c m of Yen 1300 per chare M agcinct a 
cunew market price per share (calculated in accordance whh dm 
Condition*) of Yea 2,826-3 

2. Accordingly, the Coavetsten Price of the ribove laenriuued Bands will be' 
mboBted pursuant to Condition 5(Q (ii) of the Bands effective as from die la 
October, 1987 Tokyo time. 

Conversion price before adjustment: Yen 1990 
Convemten price afar adjustment: Yb» 1903.2 

18* September, 19B? 

pany, Limited 

nmcni 2'Chome, 

Chuo-kn. Tokyo 

gfi saa 133393313 I 133331 1333 gggaggaWgWiai^M 15U3 3333333333 53333 3331333 3333 5313 93333333 3333 gl jj gW |A 

Financial Times Friday September 181987 




68 875 

27 U8 
53 IBS 

- £OTi 

S3 4U SZ 

©3 <00 WO 

193 B8 
W 210 112 

U 77^ « 
U 141 110 

13 »4 199 

2J 676 396 

35 *631 309 

5.4 293 12D 

23 406 242 

63 <13 324 

— T9Pj 120 

— 353 1B8 

27 331 m 

4W 268 
170 38 

m SO 3M 

n U24 795 

246 158 
596 252 
*158 84 

520 370 
436 166 


if Q1B £lia 

- ^ 1 54 

* IS 


“ @ 

— 138 

M £§ 


25 g 

a I 

B K 

350 240 
620 395 
88 68 
655 484 
'83 35 

ta 542 
135 90 

•480 290 
353 137 

*42fl 298 
290 ITS 
120 87 

369 235 
765 398 
•87 57 

■565 411 
144 134 
642 480 
435 293 
763 374 
•S3* 421 
5B0 360 

169 141 
440 294 
288 236 
07 705 
£B* 590 
£276 £212 
042 728 
152 125 
148 91 

Off. 680 
■529 332 
178 122 

76 44 

296 132 

4.9 — 
3.4 4j0 UL1 
22 43 15.4 
33 4.9 U 


29 2U 

65 — 

13 392 
31 — 

66 * 
L7 — 
38 117 
5l6 — 
24 63 
62 — 

14 — 
27 18.9 
31 — 
31 — 
38 - 
34 — 
67 — 
36 — 
48 54 

108 73 
111 58 
440 Z78 
275 110 

471 30 


152 124 
709 540 
220 131 
239 Ml 
195 MS 
535 440 
352 202 
1280 140 
432 3» 
530 385 
ZBD*! 187 
425 259 

399 264 

94 68 

205 138 
235 345 
4B8 370 
£11* 925 


480 370 
603 345 
264 195 

•579 463 
305 ZTO 

405 Z77 
477 274 
445 235 


449 270 
460 193 

295 222 
•505 279 

67 33 

155 68 

400 M2 
375 2X7 
4429 263 
31fl 97 

94 31 

290 78 

252 154 
•322 160 

186 ue 

*532 197 
M8 65 
675 136 

579 335 
245 120 
310 220 

250 86 

138*3 76 
38 n 
204 143 

160 80 
373 250 

66 23 

184 114 
278 150 
•3871j no 
387 246 

402 119 
100 84 

256 129 

m 29 
an 73 

42 » 

258 170 
273 113 
215 in 
325 M0 
281 116 
182 88 
D3 « 

* = 

S S 

296 171 

1« 71 

127 80 

190 150 

406 224 

154 120 
424 2681 
161 49 

199 40 

tfh 36 

71 \3A 48 
3J 1 38 98 
25 [44 104 

1 31 

07 184 
14 — 
22 2.9 194 
20 42 144 
23 25 248 
22 48 12.9 
07 * 


lied ' 


21 3a bM 
28 33 M4 
09 17 411 
46 11 273 
28 28 28J 
31 3L5 I2i 
38 16 295 
36 38 93 
28 1.9 322 

• 23 4 

L6 <3 2L1 
26 25 20.9 

32 23 168 

33 22 18.9 

42 16 152 



43 U 237 

♦ 15 * 

El 25 23 
43 U 212 

24 321178 
36 151206 
18 46 M4 
38 18 18.9 
23 27 HD 

29 30 158 
22 32 163 

30 05 613 

28 2.9 168 

— — 714 
22 32 18.9 

29 25 152 

- 16 — 

- 13 - 

14 32 312 

25 36 Z3U 

36 23 152 
18 32 232 

— 21 - 

32 09 462 

22 24 268 

37 22 172 

23 43 DUO 
28 36 191 

33 27 14.9 
36 18 212 
65 18 ZL3 
108 05 308 

38 13 292 

34 IS 238 
4 12 * 

24 22 275 

28 34 142 

21 34 187 
— 22 — 
24 2J 202 

15 51 183 

— 04 — 

16 48 20.4 

29 Z9 164 
64 13 115 
24 4.9 115 

26 48 122 

11 62 194 

30 24 M3 

33 25 148 
L9 10 2131 
36 16 238 
9 36 4 

22 30 191 

14 43 223 

23 44 116 
29 31 H8 

18 28 315 

27 25)209 
00 06 298 

34 21 17.4 

15 42 158 

19 21 338 
38 28 232 

28 15 267 

— 32 — 

— 65 — 

— 58 — 
38 58 122 

— 34 - 
28 25 198 

18 25 37 

12 08 — 

19 41 168 
4 3.9 4 

12 17 403 
34 2.4 121 

31 15 ao 
03 06 — 

4 31 4 

•200 99 

US 63 
*Z?9 332 
513 1« 
10 9 

30 0 US 
290 281 
158 e 
430 238 
340 230 
•flSfa « 
540 M3 

3« a 

74 23 

US ug 
32 12 
07*5 640 
H8 74 
240 MS 
240 159 





















ft U 










111 38 078 

• S3 l 

44 32 96 

28 S3 174 
24 26 223 
05 12 — 
23 38 M3 

16 57 03 
— 02 — 
19 69 923 
— 13 — 
33 30 1X7 

17 41 172 
U 461153 
26 29(172 

25 35057 
09 0.9 1 — 
18128 B73 
28 { 32 [208 

32 llto 

24 34 1165 
17 22 S4 
32 12 S6 
4^ 1 28 14 

27 1 22 |18J 

37 U 238 

{ 28 4 
30 4 
z4 40 M8 
38 26 173 
61 08 218 
26 52 103 
24 38 153 
28 2b QU 
23 13(452 
34 06 558 
31 22 N8 
32 U 316 
26 21 SO 
27 14 296 
23 33 165 
22 23 243 
38 17 272 
26 38 131 
24 18 1316 
53 lOfej 
34 24 13J> 
444 03 — 
73 168 — 
197 57 — 
23 43 156 
19 26 231 
— 55 — 
26 26 206 
34 24 221 
— 81 — 
48 22 132 

03 24 — 
26 13 402 
44 10 m 
28 48 168 
38 17 268 
4.9 32 83 
33 05 616 

21 42 U4 
2-9 12 395 

4 17 4 

33 0.9 397 
— ai — 
11 26 166 
73 05 31 
48 18 142 

A 45 144 

: u : 


35 18 405 
4 U 4 
4 14 4 
21 42 158 
48 J8 147 
47 23 128 
23 31 198 
28 22 205 
— . 2.9 — 
13 * 149 
40 16 201 
37 07 178 

18 24 355 

19 38 2U 
07 52 M 
26 15 3W 
34 18 408 
4 04 4 

81* 58 
188 9b 
106 61 
450 265 
*340 245 
315 250 




M** - i 
— - 1 

=*?*- .y *: toil 

Hi . . !JL. 
_ a?. 

. KC. -•Cii: 
■«*.- 22 _ 

X' , — 

sn •: a? 
«£_' «'. 
n tr, 


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Financial Times Friday September 18 1987 

Account Dealing Dates 

•First Declare- Last Account 
Dealings lions Dealings Day 
AngM Sept lfl Sept 11 Sept 31 
Sept 14 Sept 24 Sept 25 Oct 5 
Sept 28 Oct 8 Oct 9 Oct 19 

- New time ricaUiiss may take place 
from 9.00 am two business days earlier. 

Further positive signals on the 
economy were the trigger for 
instiotiona] investors yesterday. A 
second-quarter adjusted current 
account deficit of only £174m, 
owing to a large invisibles sur- 
plus, tipped the scales alter 

Wednesday’s buoyant industrial 
production figures and brought a 
ready response. 

Fund managers altered their 
investment decisions from neutral 
to bullish and a leading institu- 
tion commented “ with good news 
now appearing all over the front 
window, you simply cannot afford 
not to be invested.” The equity 
market’s resilience this week to 
adverse Wall Street and Tokyo 
influences was another encourag- 
ing development, said larger 

Alpha and other top-quality 
stocks were the main targets for 
the inflow of funds and the FT-SE 
100 share index pierced 2300 for 
the first time since August 5. Many 
chartists consider this an impor- 
tant landmark, forecasting that a 
consolidation above the level will 
lead to an autumn upsurge in 

Other economic pointers 
released yesterday included aver- 
age earnings and unit wage costs 
for July, both of which were con- 
sistent with accelerating growth. 

With the US market trying early 
yesterday to regain some of the 
ground lost recently, leading 
shares in London showed little 
sign of reacting. The " footsie” 
index closed up 24.7, its best gain 
since August 11, at 230L5. 

Activity was spread evenly 
between the industrial 1 sectors, 
while Merchant R*«te consumed 
the business in the financial area. 
Marketmakers were of the opinion 
that it was a question of when, not 
if, the next bid arrives; the battle 
for control of Guinness Peat inten- 
sified yesterday when publisher 
Robert Maxwell disclosed an 
increased share stake. 

Government bonds also 
responded strongly, but the 
upturn was described as a steady 
progressive squeeze on traders' 
short positions. Evidently many 
professionals had decided earlier 
in the week to go short of stock 
because of the impending monet- 
ary statistics, due today, and next 
week's long bond auction. Subse- 
quent events have forced covering 
of these commitments, leading to 
a technical shortage of stock. 

Domestic retail buying of lon- 
ger-dated Gilts has exacerbated 
this situation, and selected issues 
replied yesterday, bounding 
ahead by 116 points. Medium-life 
stock rose nearly a point and the 
shorts also moved up strongly 
following exhaustion of the long- 
standing tap. Treasury 8 per cent 
199 L at 93. To satisfy a specialist 
demand, the authorities re-acti- 
vated Treasury 3 per cent 1992 and 


Response to positive economic signals brings largest 

rise in equities for five weeks 

Guinness were actively traded 
following the first-half figures and 
confirmation of the acquisition of 
Schenley Industries, Die US drabs 
distributor, n a deal worth S480m 

Guinness dipped sharply to E8p 
in immediate reaction to disap- 
pointing interim profits of 
£151m— well below even the most 
cautions estimates— and thoughts 
that Schenley owner Mr Meshu- 
lam Riklis might now unload his 
30m shares in Guinness on a 
rather unwilling market 
However, the price rallied to set- 
tled only 8 lower on balance at 
367p with dealers somewhat hear- 
tened by talk that the shares 
would be disposed of In an 
•* orderly ** fashion. Analysts 
regard the price paid for Schenley 
as fair— Wood Mackenzie, for 
example, were quick to reiterate 
their “strong buy” advice for 

Domesic and US investors 
showed renew enthusiasm for 
Glaxo, which moved up to £17%. 
Mochida of Japan has granted the 
group a licence to develop, manu- 
facture and market an injectable 
cephalosporin antibiotc. code- 
named M 14659 and now in the 
early preeliniC3l stages, in all 
countries except Japan. 

Clearing banks were showing 
modest falls during the day but 
picked up strongly towards the 
close with Midland finally 9 fir- 
mer at 518p amid talk of yet 
another stake building exercise 
and the possibility of a fail-scale 
bid for the bank. NatWest were 
equally in demand and improved 
7 to 717p. Barclays edged up 5 to 
583p but Lloyds held around the 
340p level. 

Profit- taking lowered TSB, 
finally 2Vu off at 143p but Standard 
Chartered eased 3 to 820p on profr 
taking fallowing press suggestions 
that toe bank is negotiating the 
sale of Union Bancorp, its Califor- 
nian subsidiary. 

Merchant banks remained very 
much in the limelight as the 
Saatchi brothers’ intention of 
moving into Financial services and 
the bid for Guinness Peat trig- 
gered another bout of takeover 
speculation. Turnover in Guin- 
ness Peat expanded dramatically 
to 18m shares as an early foray 
into toe market by Robert Max- 
well lifted his stake in GP to 638 
per cent or 20.1m shares. Guinness 
Peat shares dosed a penny up at 


Hifl Samuel, where bid specula- 
tion built up significantly, spurted 
7 to 664p. Klcinwovt Benson, due to 
announce interim figures on Mon- 
day touched 542p, prior to closing 
a net 3 higher at 529p. Bid specula- 
tion, triggered by the bid battle 
for Equity and Law launched by 
Ron Brierley and followed up by 
Compagnie du Midi of France, 
prompted another wave of 
speculative support for insur- 
ances. Abbey raced up 6 to 322p, 
Legal & General, helped by favour- 
able press comment, gained 8 to 
335p and Sun Life moved up ??. 





Staee CgnUfatloe 













































1 3202 



























S.E. Al 



Earrings YM.%(MD 








Sep. 16 

Sep- 15 









SEAQ Bargates C5 pmJ 






Equity Turnover (£n)_ 







5-bay Average 



Equity Bargains 




Shares Traded CmD — 






Equity Vatoe 



10 a.m. 

11 UTL 



1 p-m. 

2 P-fT7. 


3 p.m. 

4 p.m. 

Day’s High 18123 Day's Low 17983. Baris 100 Go*. Sea 15/1CV26, Ftaed lot. 1928, Onto* 1/7/35* Gold Mines 12W55, 

SE AeaMty 1974, * Ha-1538. - 


tied at503p compared with a sns- 


gtoUe William Balrf ros e 20 to 
533p in repl to mcreaMd totenm 
profits. Hollis continued to reflect 

good figures and gained 8 mote to 

^Casino group Aspfnafl Holdings 
settled 7 cheaper at I78p 
in* the recommended snare 

exchange offer, with cash alterna- 
tive of 173p per share, worto some 
fSOm. from Alfred Walken th elat- 
ter closed 23 lower at 375p. Spec; 

fll -Q ik ynln rilft fflflrl ffit &SQ 

mmx WCic a luiates utsvciv^iiiicaiii aaa utu t(uoutcA» 

dipped to llOp pnor jetosuigT Crownx sttnatioh. Other money 
cheaper at 121p; toe • shares ihave attraeted ^pathetic 

risen sharply recently following 
news that Mr Neil Scot, former 
ri?»frnv»n of Owners Abroad, and 
associates, bad acquired a 22 per 
cent stake. Marina Development* 
moved up 20 to 620p on talk that a 
is about to change han d s . 

Increased first-half profits 

tallied 4 to 103P « the sizable 
first-half loss— largely attnhut- 
ahle to a £L8m write-off on stock 
valuation— was alleviated by the 
maintained dividend; MW 
regarded the move as a “positive 
clearing of the decks n and expect 
the share price to be bolstered by 
yield considerations. 

gsthaans remained firm and 
rose 12 more to ^Bp, although 
dealers expressed scepticism that 
Rembrandt, which recently lifted 
Its stake in Rothmans to 48 per 
cent, would be prepared to launch 
a foil-scale offer for the outstan- 
ding equity. 

British and Comnw we a ia rose 
10 to 497p awaiting the next 
development in the Quadrex/ 

a like amount to SSUp and Eater- 

prise 13 to 336p. 

Speculative buyers, were again 

attempting to nibble at lUaghnr 
Jute, finally 80 up for' a two-day 
advance of 86 to 230p. Elsewhere 
in Overseas Traders, dealers 
reported a lively turnover In Har- 
risons and CnrtBU, 7 dearer at 
691p, and laekcape, 14 better at 

support with International City 13 
up at 284p, and MAI, scheduled to 
report prelimiary figures on 
September 28, 19 to the good at 
684 P- 

OH shares staged a rapid adv- 
ance alter the recent lack of prog- 

_ ress. British Gas edged up 3 to 

prompted occasional support for 176p, BP jumped 10 to 374p, Biiteil 

Commercial Union jumped VA to 
392p on talk of an Imminent bid 
from the Continent Royals, 
boosted by the “down under** 
stake, were 5 higher at 570p. 

Guinness aside, attention in 
Breweries centred on Baekfeyi 
which spurted to 220p before set- 
tling 20 dearer on balance at 203p 
following the surprise revised 
offer of 192p cash per share from 
peter Clowes and Guy Cramer 
which has won the recommenda- 
tion of the previously hostile 
Buckleys board. 

Riindfag w presented a firm 
appearance as Institutional 
buyers re-emerged pending news 
of some important trading state- 
ments. KMC, half-year figures due 
on September 24, revived strongly 
with a gain of 12 at 471p, while 
Tarmac, interim results expected 
next Monday, firmed 8 to 305p- 
Barratt Developments, also repor- 
ting soon, gained IS to 232p, while 
George Hlmpey, boosted by a 
broker’s recommendation, firmed 
8teto277pL Redland attracted sup- 
port following a launch with 
institutions and rose 12V4 to 503p; 
the company, alter announcing its 
intention last week to become a 
major player in the plasterboard 
industry, yesterday agreed to take 
a 45 per emit stake In Norgips, a 
privately-owned Norwegian com- 
pany with manufacturing facili- 
ties in Norway and the Nether- 
lands. CSR, Redland’s joint ven- 
ture partner in its move into 
worldwide plasterboard, will 
participate in the acquisition. 
Elsewhere, BlecUeys advanced 25 
to 525p in belated response to 
increased half-year profits, but 
McLaughlin and Harvey encoun- 
tered profit-taking in the wake of 

the recent figures and slipped 13 
to 280p. 

lutoy in profits in Una with esti- 
mates-— described as pleasing by 
certain market sources— failed to 
inspire Laporte which settled a 
shade cheaper at 537p. Among 

showed volume of nearly 7m 
Shares. Kwik Save, considered 
cheap in some quarters, firmed 7 
to 381p. 

Trie and Iyle, boosted afresh by 
rumours Hmt it sold its stake in 8. 
A W. Berisfard, rose 20 more_to 

other Chemicals, Faseeo attracted 888p; Berisfard firmed 7 to 385p. 
support following a broker's bull- 
ish circular and rose 8 to 309p; the 
interim results are due at the end 
of the month. Tbnrgar Bardex 
r ev i ve d with a gain of 7 at Uflp, 
but Welstanhalme Sink shed 5 to 
400p following tiie interim state- 

A firm Hotel sector showed 
Grand Metropolitan 7 up at 568p 
and Trustiumse Forte 6 higher at 
258p. LaDroke picked up 4 at 

Among the major international 
Stocks, Beecham found support at 
S69p. up 9, while BAA, a subdued 
Turnove r in electricals and marie* recently, picked up 4 at 
electronics was reduced. 140p. Air w a ys improved 6 

F lam y, whore the number of to 205p. BecUtt and Colmsu con- 
shares changing hands was only trasted with a fall of Vt to £10% on 
10m compared with the previous disappointment with the interim 
day's 32m, edged up a shade to results; profits came in some Btm 
2 OOWtp, with traders questioning below recently-upgraded market 

the wild rumours that did the 
rounds on Wednesday. Thorn EMI 

intima te* 

international rose U to 

jumped 12 to 072p reflecting talk 3S0p following the annual meet- 
of a major re-rating of the shares fog, while CswanDe Grata gained 
after the deal with Granada. 15 to 9Qp on the announcement 
GKN shares raced up 18 to 396p that a consortium headed by John 
on talk that a- bid for Amari could Carr had acquired a 6 per cent 
be ou toe cards. APV Baker pro- stake in the company at lOOp per 
vided one of the day's outstanding share. Wills &aop jumped 27 to 

features and leapt 36 to 832p 
following ‘the interim figures 
which showed Interim pre-tax 
profits of £l&2m well in excess of 
toe most optimistic figures which 
had ranged up to around £14m. 
Garten Engineering’s interim 
figures were given a resounding 
welcome and the shares surged 
ahead to close 18 firm at lTOp. 

Food Retailers, although little 
rfanp d on balance, a t tra c te d 
sharply increased turnover. 
Iheia.l Mslnibnij ami AHIIi MU 
all registered volumes of around 
5m shares, while Dee Catparatian, 
following the .annual mrnting. 

213p fallowing an offer of 190p per 
share cash from Australian Inves- 
tors Corporation, while Hawtal 
Whiting, in which dealings 
resumed in the wake of details of 
an offer from First Security, set- 

Ford main dealer Ferry, 5 np at 
313p, and relative market 
newcomer Lancaster, also 5 to the 
good, at 218p. The sector was 
again featured, however, by Nis- 
san dealer D. C. Cock which 
improved another 25 to 280p- 

Trading Properties remained 
.subdued. Land Securities edged 
no to 603 p nrior to dosios 
unchanged at 600p, while XEPC 
toed 6 to 580p; the latter 
announced a 5100m US fond rais- 
ing operation yesterday. British 
Land, stimulated by the sale of Hs 
Gripperrods subsidiary to GH 
Xnamtriala far tafttm, fir m ed 5 * n 
3<2p; CH were a penny dearer at 
186p. fodder, which produced 
good figures and a confident state- 
ment on Wednesday, finned S to 
157p, while London and Edinburgh 
attracted a burst of buying 
interest and gained 9 to ISBptHeli- 
cal Bar rose 13 to 295p. 

Shippings again provided a cou- 
ple of outstanding firm features. F 
60 Deterred advanced 22 to 7Up 
on fresh consideration of the 
group’s extensive properly port- 
folia Demand for Mersey Docks 
continued nnaboted, tins com- 
bined units rising 70 to 

415p an reflection of the 10 per 
cent stake taken by Peel Holdings. 

Textiles retained a selectively 
firm appearance: Wednesday's 
extremely impressive results from 
Coats Viyella stimulated raGoer- 
taslds, 10 better at KBp and Teo- 
tsl, 8 Vt dearer at 158Vhp. Corah 

The half-year figures andprop- 
osed share spUrdtom RTffl were 
given an excellent reception and 
BTZ shares moved up i to aarafc, 
. on the other hand, suf- 
from profit-taking and dip- to £UAfc-- 


Lively demand for the trnfer- 

lying equity market stimulated 
increased activity . in traded 
options. Total contracts struck 
amounted to. 5S306— the highest 
for over three -weeks. BP were 
particularly active la recording 
4.482 calls, 2323 of which were 
done in the October 390’s; BP also 
attracted 2,730 pots, the January 
360 and 390 series contributing 
L630 and 800 trades re s pec tive ly. 
Speculative excitement height- 
ened by stake sale rumours 
prompted a lively business in 
Flessey with 3320 calls and 845 
puts done. Marks and Spencer also 
found favour with 2486 calls 
traded. L602 in the October 240’s. 


V" ” 
/ . 

* .-■■■ 

T '*’■ 


The toflowtos is based m traflng wtar* far Alpha securities desk tte«yi the S£AQ qatea 
yesterday wtil 5 pm. 





Arafl Group 



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csl trusts caw, 




LOANS CD. NVUa. Aog Utipc 26 MU 
87, A MERI CA NS CD, Al tosbeny & 
VW, Home Grp, TRUSTS CD. Liberty 
AO Star. 















- 340 










































































































































These Indices are the joint compMuni ofihe Ftnaidal Tfetes, 
the Institute of Actuaries and the Faculty of Actuaries 


Thursday September 17 1987 
















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««.«! oMdend rate paid nr payable nn p»» 0 naaras Basra 
Iridend and yMd. h AtKMdmrtfcMT M “Wdend on Ml 

Pnrriora Attend; pte note tased on Mat wul earrtn^ Sridends;^ onmr rttoes to 


Haricn. ttamed 

fa ttto n HBfes- # lodwftM f**- * Urtted < 

H 0 UDAV and travel ADVERTISING 

is published on 

Wednesday and Saturday 

For details of Advertising Rates contact * 

Delrdie Venables 
RMnctaJ limes. Bracken House 
10 Cannon SL t London, EC4P <irv 
T etephone: 01248 8000.^ i£l SU 

- '/ 


‘ iaiww’iVX .Ji.... . . . 

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Financial Times Friday September 18 1987 0 


Sack Un RiklHWEta 

Continued from Page 47 

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Inti City Hldgs -~™284 +13 

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321 +10 Midland Bank 518 + 9 

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Reckxtt&Colman .£10% -Vi 



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Continued on Page 45 



Financial Times Friday September 18 1987 

•• /:*-<■- ! 

A- 1 



Worries over tax send Indian markets tumbling 

Sporadic buying 
fails to stall 

INDIA'S share markets have 
nose-dived in the past week is a 
sharp reaction to a Bs21bn 
(SLffim) draught relief package 
unveiled by Finance Minister 
Niiayan Dutt Thvari on Tuesday. 

downward drift 

Mr Tiwari aims to raise an ex- 
tra BSlQhn from income tax, fu- 
elling speculation that corpora- 
tion (ax nay also be increared. 


BUYING interest remained sporad- 
ic and nervous on Wall Street yes- 
terday as initial strength gave way 
more than once to downward pres- 
sure and stock prices settled nar- 
rowly easier, unites Gordon 
Cmmb in New York. 

The Dow Jones industrial aver- 
age finished 229 down at 2,527.90. 
In slower volume of 151.3m shares 
against 195.7m, the NYSE compo- 
site index was a bare 0.03 easier at 
170.48 as declines led advances 819 
to 682. 

Fund managers in particular 
were said largely to be sitting out 
the oscillations until a trend could 
be established more clearly. Credit 
markets showed a modest improve- 
ment but there top demand was 

A weight of corporate debt issues, 
totalling about S3bn so far this 
week, has at the same time been 
unleashed by company treasurers 
apparently convinced that interest 
rates were heading higher. 

The Detroit car makers mean- 
while responded to the tentative 
wage deaL Ford, the pact at which 
will be the industry b enchm ark, 
gained S% to S106 after trading S2 
higher and Chrysler put on £1 to 
S43% as its strike in Canada drew to 
an end. 

General Motors, however, was S% 
weaker at S87V4 - it is the least able 
to afford any elements of generosi- 
ty in the settlement. The sector re- 
ceived additional cheer, though, 
from news that part of Honda's ex- 
panded US production will be chan- 
nened back to Japan. 

Brockway, a glass and plastic 
container maker, surged $19% to 
S58% as a surprise S60 a share bid 
emerged from Owens-Illinois, 
which had been previously taken 
private through Kohiberg Kravis. 

into which most of the entertain- 
ment side is being injected, held at 
S13% after its recent run-up. 

Mattel, the toy maker, lost S% of 
its gain this week at $14% following 
its denial of knowledge of factors 
that might move the share price, 
other than good demand for its lat- 
est product, called Certain Power. 
New World Entertainment, which 
had been named as a possible suit- 
or, was up S% to £8%. 

Sara Lee added S % to 544% after 
the foods group said it was talking 
to Akzo about buying the Dutch 
company’s consumer side for S600m 
and was selling its own Electrolux 
division. The prospective deals 
were judged favourably, and 
Moody's affirmed its debt ratings 
for Sara Lee. Pillsbury, also in con- 
sumer foods, picked up V/i to S43% 
on its higher first-quarter remits. 

In over-the-counter trading Hen- 
ley Group, an industrial products 
maker, gained 51 to $30% once the 
board authorised the purchase of 
up to 2Bm shares, around a fifth of 
its current equity. 

Among the money centre banks 
nearly 5.3m units of Citicorp 
changed handc after its 20m share 
issue, and the price dipped $% to 
$57%. Of the others to have issued 
shares in the latest round of capital 
strengthening, Manufacturers Han- 
over at £38% was down S% and 
Bankers TYust finned $% to S46. 

Credit markets were buoyed by 
the provision of four and seven-day 
system repurchases from the Fed- 
eral Reserve in its efforts to even 
out reserve positions. Fed funds as 
a result came down to 7%» per cent 
from an opening 7%. 

Some short rates firmed, with the 
three-month Treasury bills three 
basis points higher and yielding 
6.55 per cent, in part reflecting the 
pending Treasury note issues in its 
planned refunding. But at the long 
end, the 8% bond of 2017 added % 

The Bombay stock exchange 
30-share index has plunged 21 
points so far tins week to 463A2, 
to the surprise of analysts wfao- 

had expected a rally on Monday 
after the start of the new fort- 
nightly trading period on Friday. 

The Indian markets have been 
rudderless, making occasional 
feeble attempts at a rally, since 
late August when the All-India 
share index of the Economic 
Times, India’s business 
newspaper, touched a year's 
peak of 2763. Share prices have 
fallen some six per cent in three 
weeks, bat the ET index at 260 is 
still 10 per cent higher than a 
year ago. 

Some investors, mainly gov- 
ernment-owned investment in- 
stitutions, have been optimistic 
that the country will tide over the 
worst drought in several decades, 
but there are as many bears on 
the market. 

Unit Trust of India, in Its re- 
port to frHia International Fund 
investors, says the diversion of 
resources from developmental 
programmes to refief work will 
demand for agricultural 
products and investment-orient- 
ed industries l ike cement and 

steel. But UTI leek the scope for 
expanding demand In India is 
unlimited, provided prices are 

The UTl has managed the Lon- 
don-feted India Fund sktifnpy to 
lift its net asset value by 25j per 
f»nf in rupee terms. The £1 
(SL65) unit of the India Fund, 
which had been quoted below 
par over the past year, surged to 
an afi-time high of H7p last 
week in London but has since 

I nv es to rs appear to take a fa- 

vourable medium to tods-tenn 
view. Several new issues ot equi- 
ty have evoked an overwhehnnig 

The public offer fay Hoganas 
India, a subsidiary of a Swedish 
company, was subscribed 85 
rimxj end that of Garden Sift 
Mills, a textile conglomerate, by 
20 times. 

Investments in UTI units 
passed BsSObn hst month, indi- 
cating that inv e st or s are turning 
to unit trusts rather titan buy i n g 
straight into the secondary mar- 

ket because they feel the trusts 
are more secure. 

Three more mutual funds Ik- a 
combined RsSfan are to be 
launched before (be end of the 
year andCTI feus there will 
soon be a shortage of scrip. 

. The bears in the market take a 
more short-term view, c onc erne d 
that India faces ec onomic prob- 
lems such as Inflation as well as 
possible political instability as a 
i y piH of. the - recent ■ corruption 

R.C. Murthy 



Blue chips unsettled 
by dollar uncertainty 

Steels remain sturdy 
amid broader decline 

THE FURTHER overnight fall on 
Wall Street stalled the larger Euro- 
pean bourses as the dollar's vacilla- 
tions weighed heavily. 

Frankfort fell again after an ear- 
ly rally foiled to win institutional 
support The effect of a slight rise 
in the dollar was countered by con- 
cern over the further steep over- 
night fall cm Wall Street 

Bine chips continued to take a 
battering, with car stocks Daimler 
and BMW DM10 and DM8 off at 
DM1.078 and DM741, respectively. 
VW, though, managed a DM2 rise to 

Leading banks also tended to 
soften. Deutsche was DM2J)0 off at 
DM69L50 and Commerzbank DM1 
down at DM30350. 

Karstadt gave up recent form 
with a DM2.80 dip to DM571L20 and 
fellow retailer Horten lost another 
50 pfg to DM235. Asko, though, 
dived DM50 to DM905 as the mar- 
ket frowned on its 1-for-l rights is- 

In electricals, Siemens shed an- 
other DM5 to DM856, but AEG 
made up DM3 to DM340. It reported 
a 5 per cent rise in sales over the 
first eight months of the year. 

Most chemicals were little 
changed, although Henkel ad- 


FURTHER positive economic 
signals spurred institutional in- 
vestors in London yesterday to 
alter their investment decisions 
from neutral to huffish. The FT- 
SE 100 index pierced the 2300 
level for the Gist time since Au- 
gust 5, dosing up 24.7 at 2£0L5, 
and the FT Ordinary was 2L8 
higher at 1,8124. 

Government bonds also re- 
sponded strongly to the second- 
quarter current account deficit 
figures, with gains of op to 1% 
points, Detub, Page 42. 

The CBS all-share index was off 1.4 TOKYO 

at 101 

HEAVY TRADE in Nippon Steel 

neering Y42 to Y380. Yamaha motor 
was YB1 up at Yl,060. 

However, high-tech stocks and 

, , . , • ^ tw u ncavi ioauc in xuppau cneei 

fomdtete ^port on news steelmakerero^ed the 

planned to sell its consumer prod- auu . u ‘ J rr. > - l v a t ^ wcu r 

planned to sell its consumer prt 
ucts units to US group Sara Lee. 

many other issues dipped. TOK lost ported higher profits, Australian 
Y40 to Y5^I50 and Victor Co of Jar National Industries jumped 22 

Royal Dutch was 

sector higher in Tokyo yesterday, 
but smalHot selling elsewhere ted 
riser the marke t sli g htl y lower, writes 

among internationals, posting FI Shigeo Mshncaki of Jiji Press. 

UO to FI 259.50. The Nikkei average fell 11242 to 

Milan to rally in hasv 24*55.31. Turnover, however, BX- 

finfaw unchanged at YbfflO arid Lend Lease gained 40 rente to ASIA 
Y2.570, respectively, while NEC after its ASL20 leap on Wednesday. 

Nestte dipped SFr50 to SFrlLOOO 

Oslo jumped to a fresh record on 

hnt off the a cocktail of good corporate news, a 
Russels dosed down but off the st™ oi j price and foreign buying. 

toy's lows following, a tote rally. ^Ti^hSe mdeTrvse 

UO to FI 259.50. 

Milan continued to rally in busy 
trade as dealers reported renewed 
confidence among foreign investors 
following the measures taken to 
stabilise the lira. 

Fiat gained L105 to L1O.460 and 
Olivetti L350 to LI 1,550. Pireffi 
added Llll to L4,348 following Wed- 
nesday’s news of higher 1986 prof- 

gained Y10 to Y2,140. 

Buying spread to heavy electa- 

panHH from Wednesday’s 82L84m cals but they failed to retain their 
shares to L28hn, reflecting active morning strength. Toshiba, on 


trade in lasgecapitalisation »«■*><= trade of 57.80m shares, soare d Y13 RUMOURS of further righto issues 
The 10 most active stocks account- at one point, but finished Y3 lower, continued to swirl around the Hong 
ed for TO per cent of the day’s total than Wednesday at Y741 under Kong market, pushing prices down 

tr ansactions. T/v^ led gains 514 profit-taking. Mitsubishi Electric sharply again in the wake of the 
to 332, with 134 issues unchanged, fell Y8 to Y680 and Hitachi YZ0 to Cheung Kong group’s fund-raising 

vanced DM8.50 to DM58850 after managed 

The cash market index lost 22 to 
close at 5420.34. 

Holdings lost ground. Reserve 
dipping BFr35 in heavy trade to 
BFr3,705. Safina and GBL were off 
BFr25Q and BFr40, respectively, at 
BFrl4£50 and BFrWld 

Fetrofina ran out of momentum 
and lost BFr75 to BFrl3.075. Among 
mfgpd banks. Generate de Banque 

to 332, with 234 iy*”* 5 nrrrhangpri fell YE 

The Tokyo Stock Exchange halt- 
ed trading several times as inves- , 
tors poured in massive buy orders “, 7 ? 
for large-capitals. A sharp 5 per 
cent increase in Japan's crude steel \r*° K 
production in August gave a parti- r 3r . 54 
enter boost to big-capital steels. x>h)f 

Nippon Steel was basest with emme 

The'bondm^rtmo^lit& m 3 ^ Hang Seng index ended 33J28 


and the approach of tie end of the <1BBrt| HKS2J5bn, down from 

October-September business year j m3!Uhn on Wednesday, as for- 
for securities houses and other ^ to leave the 

Oils and ships flourished, as did 233.72m shares traded, adding Y9 to 
industrials, led by a NKr27 rise for Y386, while Sumitomo Mgfed fodus- 

busin esses. 

The December contract of gov- 
ernment bond futures turned up to 

stage dear for local in sti t u tions. 
Funds were still being switched 

Hafslunri tn NKrB5B on news of Jap- tries jumped Y21 to Y287 on the seo- 
anese approval for sate of a media- and biggest trade of 135.78m. Nip- 

Y1 00.49, recovering par, helping to out of the Cheung Kong grotty, with 
firm prices on the mar- Cheu ng Kong itself off 10 cents at 

nal product 

Madrid also moved to a second 

pan ~FCnk»n, Kawasaki Steel and 
Kobe Steel also made the active list. 

tet The yield on the 54 per cent HKS12.50, Hutchison Whampoa 
government bond due in June 1996 down 20 cents at HKS13.7D and Cav 

““““ ~ dosing Y4 up atY335, Y7 higher at 

successive record, buoyed by opd- SSStJ v?L v™ 

T324andY7 ity at Y319, respective- 

declined from Wednesday's 5.455 endish 10 cents lower at HKS5 
per cent to 5480 per cent, hnt fin- • 

ished at 5.420 per cent 


saying on Wednesday that Colg ate BFrfi.350 and Banque Bruxelles 

r— fKvn/ 

Palmolive is to buy a 50 per cent Lambert BFr25 to BFr3,275. 

ed from thoughts of a sectoral rerat- 
ing. rising Sl% to £14%. 

Associate companies of Brock- 
way also showed strength. The 45 
per cent-owned Curtiss Wright adv- 
anced S2% to S67% and Teledyne, 
which owns 21 per cent of Brock- 
way, jumped £11% to S369J4. Litton 
Industries, in which Teledyne owns 
nearly 28 per cent, put on S3% to 
$ 101 %. 

Also in this defence and aero- 
space group of stocks, Singer shed 
S2% to S53 as speculation dwindled 
of a takeover from candidates in- 
cluding Hercules, itself $% easier at 

Elsewhere G. Heileman, the Wis- 
consin brewer, advanced £1% to 
£41% after a rejection of Mr Alan 
Bond's £38 per share takeover offer 
couched in terms which left the way 
open to a further approach. The 
state legislature was also moving 
meanwhile to tighten protection for 
companies incorporated there. 

Coca-Cola added S% to 547% after 
additional moves to reorganise Co- 
lumbia Pictures. Tri-Star Pictures, 

9.60 per cent 


stake in its recently, bought subsid- 
iary Lesieur Cotelle. 

Elsewhere, sportswear maker Pu- 
ma rebounded DM25 to DM375. 
Zurich finished- lwixgft »s foreign 

leased today. 

The all-share was IJB5 high- 
er at 32L28. 

Paris edged higher on largely do- 
mestic trade. 

Legrand bounded up 

FFr115 to FFr3435 on the tail of a 
35 per cent rise in first-half profits. 

Helsinki bit its fifth straight aiL 
time high, with the Unites afi-share ■ 
index 6j6 up at 648.4. Banks in- 
surers led tiie way. j 

Mitsubishi Heavy Industries was 
the third busiest issue with 109.77m 
shared traded, rfimhing Y 1 R to 
YB70. .. 

t jn-gp- w>ptM chemicals tex- 
tiles scored sharp gains, frith Sumi- 
tomo Chemical jumping Y23 to 


THE BUOYANT post-budget mood. 

FALLING blue chips depressed 
Toronto share prices despite gen- 
erally stronger gold issues. 

Among the falling heavyweights. 
Bell Canada drifted off CS% to 
CS38% and Canadian Pacific fell 
CS% to CS285L Energy issues were 
mixed, with Gulf Canada dropping 
CS% to C$24% and Imperial (Ml class 
A off by CS% to C$78%, but Texaco 
Canada C£% higher at CS34. 

Banks were also mixed. Royal 
Bank was up CS% at CS33% and 
Toronto Dominion up C$f% at CS33% 
while Bank of Montreal slipped 
CS% to CS32. 

investor sales in the light of weak- Other electronics responded and Al- 
ness on Wall Street was offset by catel added FFr70 to FFr2,450 and 

Stockholm dipped prior to the Y927, Ishihara Sangyo Y19 .to Y824 
weekend congress of the ruling So- and Mitsui Toatsu Chemicals Y25 to 

leading the way, although gains zxunent corporate fund- ra i sing and 
were nOt as large asdn Wedft^day flotations. 

domestic buying. 

Banks retreated. Union Bank by 
SFr50 to SFr4^75, Credit Suisse by 
SFrlO to SFr3^90 and Bank Corpor- 
ation by SFr2 to SFr498. Swiss R 

Radiotechnique gained FFr63 to 

Vallourec also featured, with a 
FFr6.40 jump to FFr70. 

Amsterdam eased as dollar 

rial Democratic Party. The Veckans Y753. Toray rose Y12 to Y900. 

Affarer afeshare index lost 12.4 to 

Elsewhere, Nlsshia Steel adv- 
anced Y38 to Y820 and Niigata Engi- 

after a bout of Tnnming profit-tak- 
ing. • V.- ' ■ 

The AH Ordinaries index ended 
9JS higher at 2^84.0 m heavy na- 
tional turnover of 213m shares. 

'starred among mured insurers with doubts were compounded by wor- 

a SFr50 gain to SFrl7,850. 

ries over Dutch economic growth. 


With skilled hands, 

A LATE rally on the back of the cents to R88.75 and Genccr falling 

firmer bullion price failed to save 50 cents to R73. Diamond stock De 

Johannesburg gold shares from Beers was 25 cents off at R5225. 

closing lower in a soft market 

Platinums brightened, however. 

In generally firmer golds, how- 
ever, Placer Dome climbed C$% to 
CS2B% and Hemlo Gold added C$% 
to CS24%. Lac Minerals was CS% 
stronger at C$1814. 

Montreal fell slightly, while Vanc- 
ouver edged higher. 

Kinross was amon g the lower with a rise in the metal’s price. Rus- 
golds, down R2 at R83, while Vaal tenburg and Lefkochrysos were 

Reefs gave up R2 to R446 and Free- each 25 cents up at R57 and R2025 
gold 25 cents to R54-25. Randfontein respectively. 

was steady at H430. Sasol again featured among 

Mining financials followed the steady industrials with a 40 cent 
downward trend, Anglo losing 25 rise to R14. 

look what you can make 
in the Far East. 


Bid eftnorth figures 


(Against tfieUSS) 


us Puti ns 

HEW YORK Sapl 17 Prev Yevago 
DJ Industrials 2S25 62' 2S3aifl 1.7G8.40 
DJ Transport ljQ20S1* T .034.70 76625 
DJ Utilities 1 9* 64 ■ 195.71 200.S5 

S&PCamp- 314.77* 31921 231.68 

FAZ-Aktien 646.13 644.43 

Commerzbank 156640 156350 


357156 350454 



SE 100 
A AB- share 
A 500 
A Long got 
World Act. Ind 
(Sept 18) 

15125 1.7905 157958 
2504.5 2579.B 1510.40 
1 .176.85 1.165.19 796.K 
158918 1576.77 875.80 
442.7 4475 3175 

9.87 10.02 1054 

134.16 13457 94.70 

ITALY Bsnca Comm. 

613.50 601.96 

n/a n/a 

n/a n/a 

US DOLLAR smiiQ Treasury 

Sept 17 Prevkwa Sept 17 Previous Sc 

- 1.8465 1.6455 P» 

1.8180 15155 25850 25875 r* 1989 99 

74355 144 55 23600 23700 , 

6.0550 85525 99700 95600 ' “ 

15055 15055 2A77S Z4775 1997 

25425 23425 35625 3 3600 8* 2017 92 

1511 1.309 21585 2,154 Sam: Hmh 

37.65 3755 6230 6154 

13155 15180 21665 21705 . 

Se p tember 17 
Price YWd 

Price 1 

Source; Harris Trust Savings Bank 


573.64 563.45 


Trmaamy Index 

September 17 

SINGAPORE Straits Times 

1,414.60 1.43420 


Tokyo SE 

2455551 2*56773 17536S 
205122 2361.71 143248 


Golds — 22BS3 

Hdustrtsis — 22043 


AB Ord. 22643 22745 
Metals & Mins. 1.431.1 1.430 8 

SPAM Madrid S£ 

32126 31931 


Credit Aktten 21958 21853 238.35 

3.09450 3,12920 


SE 5.12050 5.14240 3.928 88 

SWITZERUWk Swiss Bank Ind 
701.80 702.30 

Sepi 17 


(3-mocnn oKared me) 



9 "ha 


3 ’Trt 








FT London lotab«k 


(offered rate) 

3-monih OSS 

r »• 







USA manUiCOe 




637 ‘ 






















3- 5 








Source: Uentt Lyncti 

COMMODmCS (London) 



MeL&Mms. 351B3* 321 25 215754 
Co mp ote 35955* 3508.4 25915 


Pontote 152962' 1.93827 1507.01 

S8wr [spot fixing) 
Copper (cash) 

CM (Brent Biend) 

Sepi 17 Prev 
4S655P 46355p 

£1.12200 £159250 
£157750 21572S0 
S1BA45 SIS 60 

COU> ($/W) 



n/a 20349 196.65 


CAC Gen 42580 436.00 3775 

Ind. Tendance 11130 1 1050 9045 

Paris (fixing) 
New Voile (Dec) 

Sept 17 Pm 
546050 545850 

54602S S45855 

$456.75 S45756 

S4S9.75 $45925 

$466.90 5465.10 


IIS Traasuvy Bonda (CST1 
8% 32nds ot 100% 

Sept 17 Latest High Low 

(Sept) 83-09 83-20 82-28 

IS TTeeawy 1HIHI) 

Sim points otlOM 
(Sept) 93.62 9355 9358 

CoftMcXes of DapoaN (HMfi) 
Sim points o( 100% 

(Sept) n/a n/a n/a 


Sim pokus ot 100% 

(Dee) 9153 9158 9159 9153 

20~r**T Notional GM 

£50500 Sards ol 100% 

(Sept) 115-14 115-03 114-24 113-20 

7% C o rpo rate 

725 September 18 Prev 

6526 Price Yield Price Yield 

— AT&T 3% July 1990 

92 7.10 92 7.10 

' SCBT South Central io% Jan T9S3 

100575 1056 100.875 1056 

Phfero Srt B April 1996 

Prev 8855 1045 8855 1ft4S 

82-28 TRW 8% March 1996 

9155 1055 8155 1025 

ArCO 9% Marcri 2016 

2267 10.70 9257 «L70 

General Motors 8% April 2016 

77.14 10.70 77.14 IQ JO 

Citicorp 0% March 2018 

6443 1120 84.43 1120 

91-53 Source: Salomon Brortters 

Very few people can master . |||| 1||| 

the ancient art of Origami 
How such intricate designs 
can be created from skilfully 
folded paper remains a 

mystery to most people. ^ 

Equally mysterious 

are the lucrative stock- ffjp && 

markets of the Far East 

Very few investment ^ J 

companies know how to op - 
timise the rich opportunities 
which exist in those markets. Rj 

At GT, we’re one of the • jl|pj ^ 

few who do, which is why |B§| fj 

we set up the GT Asia Fund ^ 

It is a well established I 

and successful fond which 
allows you to invest in a variety 
of shares from both the large and 
small markets of the regions. ®| 

Our performance figures speak. .. S|| B;f| 
for themselves. 

$1000 invested in the GT Asia 
Fund in November 1975 was worth r^r.r^- 
$12,807 on 1st September 1987 and the po.Box 
net asset value per share increased by PJease * 
55.8% in the year to 3 1st August 1987 Name — 

We have the advantage of offices in Address 
Hong Kong and Tbkyo to give us a great 5ify OU 

m depth of local knowledge, 
pi Apart from Japan and Hong 

StjWv Kong, we’re also involved in the 
new an< ^ markets, of Korea 

and Taiwan, being one of the few 

B IIP® advisers to a handful, of Trust 
||| J|E|f Funds allowed to invest there. 

11 -At GT) we’ve specialised in 

P| international investment since 1969. 
O ■ We now manage in excess of 

R billion (at 31/3/87), much of it in 
the Far East, and weVe been very 

Our active, on-the-spot man- 
agement and research puts us in 
a prime position to capitalise on 
IN MM an 5 r fohire opportunities. 

The time to invest is now, 
so we strongly advise you to send 
the coupon for details of GTs 
Asian funds. You could effectively 
gp make a large sum of money from that 
gp; small piece of paper. 

^ Without even having to fold it. 

To; Julie Fallaize, GT Management (Guernsey) Limited. ZT" 

P-O. Box 366, Hirzel Court, Guernsey, ChroMl ^ 

Please send me details of GT Asia Fund. ' 


?\i$ s 

_ r *1.) ** 

. if 

shghtiy down on the previous ses- 

Among industrials which have re- 

YBO to Y2.840. But Sony cents to A$2 .92, Pacific Dunlop was 
ichitfl Electric Industrial up a farther 30 cents at ASS, and 



•r r xr: . 

BLUE CHIPS were again the worst 
hit in another declining session in 
Singapore which left the Straits 

in Sydney ported share prices ^to" Times industrial index 19 JO lower 
another record with ind ustrtals still at 1,414.60 amid expectations of im- 

In slightiy higher volume, Fraser 
and Neave lost 50 cents to SS13.30, 
Singapore Press was 30 cents lower 
at SS10.80 and Genting shed 20 
cents to S£7.10. 

' " ■! 



-..•A . 

A t- . 

■ Latest avaHaOie Ggures 

GT Asia Fund 

j □ If you are a US citizen please tick the box. 

I 4 i»poM] or hoUHngofMcmirfgi, whether 11 Apmi or Praf^.1 “ ITOh «riw«*»jilil 

vS’*V>r. ^i-r 


. .J 

; ^ — ;^.J^--nrad